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Quality signaling and international trade in food products

Author

Listed:
  • J.-C. Bureau
  • E. Gozlan
  • S. Marette

Abstract

Focusing on the issue of food safety, the authors consider a framework of repeated purchases under the scenario of imperfect information on product quality (adverse selection and experience goods). A firm in a northern country can more easily detect tainted products than can a southern one. When imports are banned, the northern firm does not always signal the actual quality of its products. Competition from imports may lead the northern firm to test the quality of its products as a way to differentiate itself from foreign competitors. Consumers benefit from the disclosure of information on quality, even though borders are open to products of uncertain quality. However, competition from imports also increases the cost of signaling high quality. This can be detrimental to the welfare of the importing country when the cost of detection is high.
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Suggested Citation

  • J.-C. Bureau & E. Gozlan & S. Marette, 1999. "Quality signaling and international trade in food products," THEMA Working Papers 99-13, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  • Handle: RePEc:ema:worpap:99-13
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    File URL: http://www.u-cergy.fr/IMG/documents//99-13Gozlan.pdf
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    References listed on IDEAS

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    1. repec:gbl:wpaper:2013-01 is not listed on IDEAS
    2. Bodo E. Steiner, 2004. "Australian wines in the British wine market: A hedonic price analysis," Agribusiness, John Wiley & Sons, Ltd., vol. 20(3), pages 287-307.
    3. Zago, Angelo M. & Pick, Daniel H., 2004. "Labeling Policies in Food Markets: Private Incentives, Public Intervention, and Welfare Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(01), April.
    4. Fontaine, Damien & Gaspart, Frederic & Frahan, Bruno Henry de, 2008. "Modelling the impact of private quality standards on the fresh fruit and vegetable supply chains in developing countries," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44378, European Association of Agricultural Economists.
    5. Banerjee, Nandini & Kennedy, P. Lynn, 2006. "Sanitary and Phytosanitary Measures : A Game Theoretic Approach of Comparative Evaluation," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35375, Southern Agricultural Economics Association.
    6. Steiner, Bodo E., 2002. "The Valuation Of Labelling Attributes In A Wine Market," 2002 Annual meeting, July 28-31, Long Beach, CA 19718, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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