Export Credit Gurantees, Moral Hazard and Exports Quality
We analyse the role played by Export Credit Guarantees (ECGs) to encourage exports to developing countries. The existence of moral hazard on the side of the firm is introduced. We show that the inability of the exporter's government to verify the actual quality of the product will limit its ability to encourage trade through ECGs, once the coverage provided goes beyond a certain threshold. This result provides a rationale behind the limited coverage on ECGs.
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- Gary S. Becker, 1982. "Competition Among Pressure Groups for Political Influence," University of Chicago - George G. Stigler Center for Study of Economy and State 23, Chicago - Center for Study of Economy and State.
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- Marin, Dalia & Schnitzer, Monika, 1998. "Economic incentives and international trade," Munich Reprints in Economics 19262, University of Munich, Department of Economics.
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