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Quality standards for used durables: An indirect subsidy?

  • Clerides, Sofronis
  • Hadjiyiannis, Costas

We construct a theoretical framework to study the impact of quality standards for used durable goods on trade [fl]ows, pro[fi]ts and consumer welfare. We show that asymmetric quality standards generate trade in used goods from high- to low-standard countries while at the same time reducing trade in new goods. Producers in the exporting country bene[fi]t from this change while consumers lose. In the importing country consumers are better off but domestic industry is hurt. These [fi]ndings suggest that quality standards on used goods may be a powerful policy tool whose use should be monitored by the WTO.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 75 (2008)
Issue (Month): 2 (July)
Pages: 268-282

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Handle: RePEc:eee:inecon:v:75:y:2008:i:2:p:268-282
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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