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Disentangling Demand-Enhancing and Trade-Cost Effects of Maximum Residue Regulations

Author

Listed:
  • Xiong, Bo
  • Beghin, John

Abstract

Maximum residue level (MRL) regulations in plant products can create unnecessary trade barriers on one hand and enhance demand via risk mitigation or quality assurance on the other. We stipulate a generalized gravity equation model to disentangle the effects of MRLs on the import demand and foreign exporters' supply. Applying the framework to the MRLs on pesticides imposed by high-income Organization for Economic Co-operation and Development countries, we find that the MRLs jointly enhance the import demand and hinder foreign exporters' supply. In addition, exporters from the less and least developed countries are more constrained by the MRLs than their competitors from the developed world.

Suggested Citation

  • Xiong, Bo & Beghin, John, 2014. "Disentangling Demand-Enhancing and Trade-Cost Effects of Maximum Residue Regulations," ISU General Staff Papers 201401010800001563, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201401010800001563
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    JEL classification:

    • F1 - International Economics - - Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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