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Public quality standards and the food industry’s structurein a global economy

Author

Listed:
  • Carl Gaigné

    (INRA, UMR1302 SMART, F-35000 Rennes, France)

  • Bruno Larue

    (CREATE, Université Laval, Québec, Canada)

Abstract

We study the impact of public quality standardson industry structure in a context of international trade.We consider vertical differentiation in an internationaltrade model based on monopolistic competition in whichfirms differ in terms of their productivity and must incurtwo fixed export costs when exporting to any given des-tination: a generic one (i.e., setting up a distribution sys-tem) and a destination-specific one to meet the qualitystandard prevailing in the importing country. Variablecosts are also increasing in quality. The absolute mass offirms in any given country is decreasing in the domesticstandard, but the relative mass (market share) of foreignfirms is increasing in the domestic standard. Increasingpublic quality standards benefit highly productive foreignfirms which gain from the quality-induced exit of lessproductive domestic and foreign firms. The increase inindustry productivity followingstricter public standardsdoes not result from induced innovation as in the Porterhypothesis but from the exit of less productive firms.

Suggested Citation

  • Carl Gaigné & Bruno Larue, 2016. "Public quality standards and the food industry’s structurein a global economy," Review of Agricultural, Food and Environmental Studies, INRA Department of Economics, vol. 97(2), pages 141-148.
    • Handle: RePEc:rae:jouraf:v:97:y:2016:i:2:p:141-148
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    Citations

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    Cited by:

    1. Alban Thomas & Claire Lamine & Benjamin Allès & Yuna Chiffoleau & Antoine Doré & Sophie Dubuisson-Quellier & Mourad Hannachi, 2020. "The key roles of economic and social organization and producer and consumer behaviour towards a health-agriculture-food-environment nexus: recent advances and future prospects," Review of Agricultural, Food and Environmental Studies, INRA Department of Economics, vol. 101(1), pages 23-46.
    2. Curzi, Daniele & Schuster, Monica & Maertens, Miet & Olper, Alessandro, 2020. "Standards, trade margins and product quality: Firm-level evidence from Peru," Food Policy, Elsevier, vol. 91(C).
    3. Jiang, Dongpo & Li, Qi & Li, Xia & Sun, Ruiqiang, 2023. "The Effect of Maximum Residue Limits on Agri-Food Trade: Evidence from Chinese Exports to the EU," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 72(03), January.
    4. Yang, Qizhong, 2024. "Heterogeneous impact of non-tariff measures on import margins through global value chains: Firm-level evidence from China," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 533-562.
    5. Luca Macedoni, 2022. "Asymmetric information, quality, and regulations," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1180-1198, September.
    6. Thomas, Alban & Lamine, Claire & Allès, Benjamin & Chiffoleau, Yuna & Doré, Antoine & Dubuisson-Quellier, Sophie & Hannachi, Mourad, 2020. "The key roles of economic and social organization, producer and consumer behaviour towards a HAFEN (Health-Agriculture-Environment-Food Nexus)," TSE Working Papers 20-1068, Toulouse School of Economics (TSE).

    More about this item

    Keywords

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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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