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Organic certification systems and international trading of agricultural products in gravity models

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  • Cantore, Nicola
  • Canavari, Maurizio
  • Pignatti, Erika

Abstract

Recent literature about gravity models points out the importance of institutional frictions in the international market of agricultural products beyond the traditional economics variables as transport costs reducing the mass of trade in bilateral relationships. In particular, previous contributions stress that harmonization of food standards could decrease transaction costs in trading relationships by stimulating international market. In a previous work we hypothesized that the acknowledgment of equivalence in organic standards may represent a reliable signal of affinity in bilateral relationships which may be useful to identify areas in which transaction costs for both conventional and organic standards are lower. This article represents a step forward, since it assumes that the acknowledgment of equivalence in identifying areas with lower transaction costs in trading relationships for the whole produce could be a strong assumption that may be relaxed through the hypothesis that affinity in market exchange could be simply signaled by the presence of organic standards for the involved countries. Therefore, in our analysis we test if countries setting specific rules for organic standards are more “affine” in trading relationships because of a low common cultural, law and political distance but also if differences in organic standards themselves can be useful to differentiate the level of affinity among regions. Interesting insights for policy makers about the identification of relevant variables for international business arise from an econometric analysis.

Suggested Citation

  • Cantore, Nicola & Canavari, Maurizio & Pignatti, Erika, 2008. "Organic certification systems and international trading of agricultural products in gravity models," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6159, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea08:6159
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    File URL: http://purl.umn.edu/6159
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    References listed on IDEAS

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    1. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    2. Anne-Célia Disdier & Lionel Fontagné & Mondher Mimouni, 2008. "The Impact of Regulations on Agricultural Trade: Evidence from the SPS and TBT Agreements," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 336-350.
    3. Jeffrey Frankel & Andrew Rose, 2002. "An Estimate of the Effect of Common Currencies on Trade and Income," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 437-466.
    4. Bruno Henry de Frahan & Mark Vancauteren, 2006. "Harmonisation of food regulations and trade in the Single Market: evidence from disaggregated data," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(3), pages 337-360, September.
    5. Nardella, Michele & Boccaletti, Stefano, 2004. "The Impact Of Eu And Us Agro-Food Non Tariff Measures On Exports From Developing Countries," 2004 Annual meeting, August 1-4, Denver, CO 20105, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Bedassa Tadesse & Roger White, 2010. "Cultural distance as a determinant of bilateral trade flows: do immigrants counter the effect of cultural differences?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(2), pages 147-152, January.
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    Cited by:

    1. Melanie Fritz & Maurizio Canavari & Nicola Cantore & Jivka Deiters & Erika Pignatti, 2008. "Commercio elettronico per la dinamica delle catene agro-alimentari internazionali: un’analisi del potenziale [E-commerce for the dynamics of international agri-food chains: an adoption potential analy," DEIAgra Working Papers 8006, Alma Mater Studiorum University of Bologna, Department of Agricultural Economics and Engineering, revised Aug 2008.

    More about this item

    Keywords

    Gravity models; organic standards; transaction costs; international market; agricultural trade; food products; Agricultural and Food Policy; Research Methods/ Statistical Methods; Q11; Q13;

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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