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

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  • Xiong, Bo
  • Beghin, John C.

Abstract

Maximum residue levels (MRLs) regulations in plant products can createunnecessary trade barriers on one hand and enhance demand via risk mitigation or qualityassurance on the other. We stipulate a generalized gravity equation model to disentanglethe effects of MRLs on the import demand and foreign exporters' supply. Applying theframework to the MRLs on pesticides imposed by high-income OECD countries, we findthat 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 bythe MRLs than their competitors from the developed world.

Suggested Citation

  • Xiong, Bo & Beghin, John C., 2013. "Disentangling Demand-Enhancing and Trade-Cost Effects of Maximum Residue Regulations," Staff General Research Papers Archive 34393, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:34393
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    More about this item

    Keywords

    MRL; sanitary and phytosanitary; SPS; standards; TBT; protectionism; maximum residue level; technical barriers; gravity model;
    All these keywords.

    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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