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Product quality, institutional quality, and market globalization

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  • Tsumagari, Masatoshi

Abstract

This paper theoretically examines how market integration, especially globalization, affects average product quality and country welfare. Using a market model in which consumers do not observe product quality and institutions help eliminate inferior quality goods from markets, I show that the effect of market integration significantly depends on institutional quality. Globalization may have a negative effect on a country’s welfare when making progress without harmonized institutional development, and may also expand the size of government, thus increasing the cost of sustaining high institutional quality.

Suggested Citation

  • Tsumagari, Masatoshi, 2025. "Product quality, institutional quality, and market globalization," Journal of Economic Behavior & Organization, Elsevier, vol. 236(C).
    • Handle: RePEc:eee:jeborg:v:236:y:2025:i:c:s0167268125002082
    DOI: 10.1016/j.jebo.2025.107089
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    Keywords

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    JEL classification:

    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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