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Quality standards, industry structure and welfare in a global economy

Author

Listed:
  • Carl Gaigné

    (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST)

  • Bruno Larue

    (Department of Agricultural Economics and Consumer Studies - ULaval - Université Laval [Québec])

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," Post-Print hal-01574927, HAL.
    • Handle: RePEc:hal:journl:hal-01574927
    DOI: 10.1093/ajae/aaw039
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    Citations

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    Cited by:

    1. Wendkouni Jean‐Baptiste Zongo & Bruno Larue & Carl Gaigné, 2023. "On export duration puzzles," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(2), pages 453-478, March.
    2. Anne‐Célia Disdier & Carl Gaigné & Cristina Herghelegiu, 2023. "Do standards improve the quality of traded products?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(4), pages 1238-1290, November.
    3. Carl Gaigné, 2020. "Compétitivité internationale du secteur agroalimentaire français. C’est quoi le problème ?," Post-Print hal-02507223, HAL.
    4. Luca Macedoni, 2022. "Asymmetric information, quality, and regulations," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1180-1198, September.
    5. Macedoni, Luca & Weinberger, Ariel, 2022. "Quality heterogeneity and misallocation: The welfare benefits of raising your standards," Journal of International Economics, Elsevier, vol. 134(C).
    6. Akash Kushwah & Rajendra Kumar, 2017. "Haccp - Its Need And Practices," Acta Chemica Malaysia (ACMY), Zibeline International Publishing, vol. 1(2), pages 1-5, January.
    7. Marette Stéphan, 2018. "Illegitimate or Legitimate Non-Tariff Measures," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(2), pages 1-18, November.
    8. Duvaleix, Sabine & Emlinger, Charlotte & Gaigné, Carl & Latouche, Karine, 2021. "Geographical indications and trade: Firm-level evidence from the French cheese industry," Food Policy, Elsevier, vol. 102(C).
    9. Luca Macedoni & Ariel Weinberger, 2021. "Quality Misallocation, Trade, and Regulations," CESifo Working Paper Series 9041, CESifo.
    10. Zheng, Yuqing & Bar, Talia, 2017. "Audit Grades in Food Safety Certification," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252714, Southern Agricultural Economics Association.
    11. Yuqing Zheng & Talia Bar, 2023. "Certifier competition and audit grades: An empirical examination using food safety certification," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(1), pages 182-196, March.
    12. 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).
    13. Pavol Durana & Pavol Kral & Vojtech Stehel & George Lazaroiu & Wlodzimierz Sroka, 2019. "Quality Culture of Manufacturing Enterprises: A Possible Way to Adaptation to Industry 4.0," Social Sciences, MDPI, vol. 8(4), pages 1-25, April.
    14. Kari E. R. Heerman & Ian M. Sheldon, 2022. "Sustainable agricultural production, income, and eco‐labeling: What can be learned from a modern Ricardian approach?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(4), pages 1614-1636, December.
    15. Dela-Dem Doe Fiankor & Daniele Curzi & Alessandro Olper, 2021. "Trade, price and quality upgrading effects of agri-food standards [Endogenous Trade Policy with Heterogeneous Firms]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(4), pages 835-877.

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