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Does Trade Weaken product Quality Standards?

  • Katia Berti
  • Rod Falvey

In this paper we investigate the interrelationships between trade and national minimum quality standards. We employ a simple partial equilibrium model in which national regulators set a minimum quality standard for a product whose quality is unobservable to consumers prior to purchase. Both producers and consumers can benefit from a minimum standard, but the former prefer a lower standard to the latter. Because producers are organised and consumers are not, the standards set by national regulators may tend to unduly favour producer interests. We focus on two specific issues: first, how the weight given to producer interests affects the outcomes in autarky and the open economy; and, second, how outcomes differ when the effects of standards on trade are explicitly taken into account or ignored in standard setting in the open economy.

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File URL: http://www.nottingham.ac.uk/gep/documents/papers/2011/11-24.pdf
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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 11/24.

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Handle: RePEc:not:notgep:11/24
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  1. Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
  2. Marette, Stephan & Beghin, John C., 2010. "Are Standards Always Protectionist?," Staff General Research Papers 12826, Iowa State University, Department of Economics.
  3. Costinot, Arnaud, 2008. "A Comparative Institutional Analysis of Agreements on Product Standards," University of California at San Diego, Economics Working Paper Series qt09f6660d, Department of Economics, UC San Diego.
  4. Ronald Fischer & Pablo Serra, 1998. "Standards and Protection," Documentos de Trabajo 45, Centro de Economía Aplicada, Universidad de Chile.
  5. Bommer, Rolf & Schulze, Gunther G., 1999. "Environmental improvement with trade liberalization," European Journal of Political Economy, Elsevier, vol. 15(4), pages 639-661, November.
  6. Rauscher, Michael, 1991. "National environmental policies and the effects of economic integration," European Journal of Political Economy, Elsevier, vol. 7(3), pages 313-329, October.
  7. Jeffrey A. Frankel, 2003. "The Environment and Globalization," NBER Working Papers 10090, National Bureau of Economic Research, Inc.
  8. Suwa Eisenmann, Akiko & Verdier, Thierry, 2002. "Reciprocity and the Political Economy of Harmonization and Mutual Recognition of Regulatory Measures," CEPR Discussion Papers 3147, C.E.P.R. Discussion Papers.
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