IDEAS home Printed from https://ideas.repec.org/a/oup/ajagec/v98y2016i5p1432-1449..html
   My bibliography  Save this article

Quality Standards, Industry Structure, and Welfare in a Global Economy

Author

Listed:
  • Carl Gaigné
  • Bruno Larue

Abstract

We study the impact that mimimum quality standards have on industry structure, trade, and welfare when firms can develop their own private standard with a higher quality than the public standard. We introduce vertical differentiation in a firm-based trade model in which firms differ in terms of their productivity and non-cooperatively select the quality and price of their product. A higher public standard increases prices set by constrained and unconstrained firms, but the effect on firms’ output is generally ambiguous for both types of firms. The most productive firms raise their private standard and enjoy higher profits at the expense of less productive firms. A public standard can increase welfare, especially when there is a high concentration of low productivity domestic firms because of a better allocation of resources.

Suggested Citation

  • Carl Gaigné & Bruno Larue, 2016. "Quality Standards, Industry Structure, and Welfare in a Global Economy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1432-1449.
  • Handle: RePEc:oup:ajagec:v:98:y:2016:i:5:p:1432-1449.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/ajae/aaw039
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ajagec:v:98:y:2016:i:5:p:1432-1449.. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/aaeaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.