Abstract
We investigate the effects of trade on national minimum quality standards for a product whose quality is unobservable to consumers prior to purchase. Two standard-setting regimes are considered: (1) where the regulatory authority takes the trade share as given; and (2) where the regulatory authority takes full account of its ability to influence the trade share. We find that standards are not a protectionist instrument in this model, the usual gains from trade apply if standards are maintained at their autarky values, trade can cause private standards to be adjusted in a welfare reducing way, and the welfare of a country is higher if its regulatory authority adopts regime (2) rather than (1).
Original language | English |
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Pages (from-to) | 852-868 |
Number of pages | 17 |
Journal | Review of International Economics |
Volume | 26 |
Issue number | 4 |
DOIs | |
Publication status | Published - 1 Sept 2018 |