Markets with untraceable goods of unknown quality: a market failure exacerbated by globalization
In markets for many fruits, vegetables, and an increasing number of imported goods, consumers cannot discern the quality of a product prior to purchase and can never identify its producer. Producing high-quality, safe goods is costly for a firm and raises the collective reputation for quality shared with its rivals. Minimum quality standards improve welfare. If consumers observe the country of origin of a product, quality, profits, and welfare increase. Exports from countries with more exporting firms are of lower quality and sell for lower prices. If one country imposes a minimum quality standard on its exports while other countries do not, consumers benefit. As for sellers, the regulation raises the profits of firms in the country with regulation and lowers the profits of firms in countries without regulation.
|Date of creation:||14 Dec 2009|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jean Tirole, 1996.
"A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality),"
Review of Economic Studies,
Oxford University Press, vol. 63(1), pages 1-22.
- Tirole, Jean, 1994. ""A Theory of Collective Reputations" with Applications to the Persistence of Corruption and to Firm Quality," IDEI Working Papers 38, Institut d'Économie Industrielle (IDEI), Toulouse.
- Tirole, J., 1993. "A Theory of Collective Reputations with Applications to the Persistence of Corruption and to Firm Quality," Working papers 93-13, Massachusetts Institute of Technology (MIT), Department of Economics.
- Carl Shapiro, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, Oxford University Press, vol. 98(4), pages 659-679.
- Winfree, Jason A. & McCluskey, Jill J., 2003.
"Collective Reputation And Quality,"
2003 Annual meeting, July 27-30, Montreal, Canada
21927, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Alan L. Olmstead & Paul W. Rhode, 2003.
"Hog Round Marketing, Seed Quality, and Government Policy: Institutional Change in U.S. Cotton Production, 1920-1960,"
NBER Working Papers
9612, National Bureau of Economic Research, Inc.
- Olmstead, Alan L. & Rhode, Paul W., 2003. "Hog-Round Marketing, Seed Quality, and Government Policy: Institutional Change in U.S. Cotton Production, 1920 1960," The Journal of Economic History, Cambridge University Press, vol. 63(02), pages 447-488, June.
- Raphaël Soubeyran & Elodie Rouvière, 2008. "Collective Reputation, Entry and Minimum Quality Standard," Working Papers 2008.7, Fondazione Eni Enrico Mattei.
- Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
- Salant, Stephen W. & Kotchen, Matthew J., 2009.
"A Free Lunch in the Commons,"
dp-09-30, Resources For the Future.
- A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
- Pierre Fleckinger, 2007. "Collective Reputation and Market Structure: Regulating the Quality vs Quantity Trade-of," Working Papers hal-00243080, HAL.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:21874. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.