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Trade-Inducing Quality Standards for Used Durables

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Author Info
Sofronis Clerides
Costas Hadjiyiannis

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Abstract

We construct a theoretical framework to study the impact of asymmetric quality standards on used durable goods on trade flows, profits and consumer welfare. We show that asymmetry in quality standards generates trade in used goods from high to low standard countries while at the same time reducing trade in new goods. The industry in the exporting country benefits from this change while consumers lose out. Consumers in the importing country are the biggest beneficiaries, but domestic industry is hurt. These results suggest that quality standards on used goods are a powerful policy tool whose use should be monitored by the WTO.

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File URL: http://papers.econ.ucy.ac.cy/RePEc/papers/5-2004.pdf
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Publisher Info
Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 5-2004.

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Length: 27 pages
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:ucy:cypeua:5-2004

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Web page: http://www.econ.ucy.ac.cy

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Related research
Keywords: quality standards; durable goods; used durables; trade in used goods;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Goering, Gregory E & Pippenger, Michael K, 2000. "International Trade and Commercial Policy for Durable Goods," Review of International Economics, Blackwell Publishing, vol. 8(2), pages 275-94, May. [Downloadable!] (restricted)
  2. Smith, M A M, 1976. "International Trade Theory in Vintage Models," Review of Economic Studies, Blackwell Publishing, vol. 43(1), pages 99-113, February. [Downloadable!] (restricted)
  3. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March. [Downloadable!] (restricted)
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  4. Bond, Eric W, 1983. "Trade in Used Equipment with Heterogeneous Firms," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 688-705, August. [Downloadable!] (restricted)
  5. Garth Frazer, 2008. "Used-Clothing Donations and Apparel Production in Africa," Economic Journal, Royal Economic Society, vol. 118(532), pages 1764-1784, October. [Downloadable!] (restricted)
  6. Clerides, Sofronis, 2008. "Gains from trade in used goods: Evidence from automobiles," Journal of International Economics, Elsevier, vol. 76(2), pages 322-336, December. [Downloadable!] (restricted)
  7. Driskill, Robert A. & Horowitz, Andrew W., 1996. "Durability and strategic trade Are there rents to be captured?," Journal of International Economics, Elsevier, vol. 41(1-2), pages 179-194, August. [Downloadable!] (restricted)
  8. Danilo Pelletiere & Kenneth A. Reinart, 2002. "The Political Economy of Used Automobile Protection in Latin America," The World Economy, Blackwell Publishing, vol. 25(7), pages 1019-1037, 07. [Downloadable!] (restricted)
  9. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August. [Downloadable!] (restricted)
  10. Grubel, Herbert G., 1980. "International trade in used cars and problems of economic development," World Development, Elsevier, vol. 8(10), pages 781-788, October. [Downloadable!] (restricted)
  11. Michael Waldman, 2003. "Durable Goods Theory for Real World Markets," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 131-154, Winter. [Downloadable!] (restricted)
  12. Frank Verboven, 1996. "International Price Discrimination in the European Car Market," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 240-268, Summer. [Downloadable!] (restricted)
  13. Leland, Hayne E, 1979. "Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1328-46, December. [Downloadable!] (restricted)
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  1. Clerides, Sofronis, 2005. "Gains From Trade in Used Goods: Evidence from the Global Market for Automobiles," CEPR Discussion Papers 4859, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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