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The ‘Signaling Effect’ and the impact of high maximum residue limit standards on U.S. vegetable exports

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  • Seok, Jun Ho
  • Saghaian, Sayed
  • Reed, Michael R.

Abstract

This paper investigates the impact of high U.S. maximum residue limit (MRL) standards on U.S vegetable exports to 102 countries utilizing the hierarchical model. MRL, which is one of non-tariff barriers with respect to food safety, is applied to home and foreign countries at the same time. Thus, firms in countries with higher food safety standards are expected to have a competitive advantage from the ‘signaling effect’. The results show that high MRL standards in the U.S. have a positive impact on U.S. vegetable exports, indicating the ‘signaling effect’ from the strict U.S. domestic MRL standards. The results provide policy makers with insights into how strict food safety regulations of the home country can be considered as a catalyst for increasing competitiveness in international markets.

Suggested Citation

  • Seok, Jun Ho & Saghaian, Sayed & Reed, Michael R., 2018. "The ‘Signaling Effect’ and the impact of high maximum residue limit standards on U.S. vegetable exports," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 150-159.
  • Handle: RePEc:eee:ecanpo:v:59:y:2018:i:c:p:150-159
    DOI: 10.1016/j.eap.2018.04.004
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    More about this item

    Keywords

    Food safety regulation; Maximum residual limits (MRL); Mixed effect model; Vegetable exports; Signaling effect;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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