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Modeling differentiated quality standards in the agri‐food sector: the case of meat trade in the enlarged EU

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  • Marie‐Luise Rau
  • Frank Van Tongeren

Abstract

Quality standards play an increasingly important role in international agri‐food trade, and their functioning as nontariff barriers to trade is widely discussed. We argue that food quality standards imposed by importing countries are more than just border measures and can have profound effects on the market structure of the exporting industry, thereby significantly influencing the supply response. We develop a stylized oligopoly model that accounts for compliance costs (fixed and variable) and investigate alternative policy options to explore different mechanisms an importing county may use to enhance the quality of its imports. The model explicitly recognizes the coexistence of complying and noncomplying firms, which is a situation often found in low‐income countries where a small modern export‐oriented segment invests in meeting foreign quality standards. We use the adjustment of the Polish meat sector to the tight EU food quality standards as an empirical example. The simulations show that a subsidy scheme can promote compliance with standards and can contribute to an upgrade of the industry in the exporting country, but its marginal effectiveness is diminishing.

Suggested Citation

  • Marie‐Luise Rau & Frank Van Tongeren, 2007. "Modeling differentiated quality standards in the agri‐food sector: the case of meat trade in the enlarged EU," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2‐3), pages 305-315, September.
  • Handle: RePEc:bla:agecon:v:37:y:2007:i:2-3:p:305-315
    DOI: 10.1111/j.1574-0862.2007.00276.x
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    References listed on IDEAS

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    1. Chevassus-Lozza, Emmanuelle & Majkovic, Darja & Persillet, Vanessa & Unguru, Manuela, 2005. "Technical Barriers to Trade in the European Union : Importance for the New EU Members. An Assessment for Agricultural and Food Products," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24621, European Association of Agricultural Economists.
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    4. World Bank, 2005. "Food Safety and Agricultural Health Standards : Challenges and Opportunities for Developing Country Exports," World Bank Publications - Reports 8491, The World Bank Group.
    5. Nahuis, Richard, 2004. "One size fits all?: Accession to the internal market; an industry-level assessment of EU enlargement," Journal of Policy Modeling, Elsevier, vol. 26(5), pages 571-586, July.
    6. 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 1328-1346, December.
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    Cited by:

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    2. van Tongeren, Frank & Beghin, John C. & Marette, Stephan, 2009. "A Cost-Benefit Framework for the Assessment of Non-Tariff Measures in Agro-Food Trade," Staff General Research Papers Archive 13146, Iowa State University, Department of Economics.
    3. Shon M Ferguson & Johan Gars, 2020. "Measuring the impact of agricultural production shocks on international trade flows," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 47(3), pages 1094-1132.
    4. van Meijl, Hans & van Tongeren, Frank, 2001. "Multilateral Trade Liberalization and Developing Countries: A North-South Perspective on Agriculture and Processing Sectors," Conference papers 330951, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Marie-Luise Rau & Frank van Tongeren, 2009. "Heterogeneous firms and homogenising standards in agri-food trade: the Polish meat case," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(4), pages 479-505, December.
    6. Suzuki, Aya & Nam, Vu Hoang & Lee, Guenwoo, 2021. "Inducing Smallholders’ Compliance with International Standards: Evidence from the Shrimp Aquaculture Sector in Vietnam," 2021 Conference, August 17-31, 2021, Virtual 315025, International Association of Agricultural Economists.

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