A Signaling Model of Quality and Export: with application to dumping

C. Simon Fan and Yifan Hu

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: Extending the literature on quality and trade and supported by the empirical evidence obtained from China, this paper demonstrates that in a developing country, a firm’s export to developed countries has a potential signaling effect on domestic consumers’ perception of its product quality. The model analyzes the signaling and imitating strategies of different types of firms in their decisions to export, and characterizes the conditions for the separating, pooling, and hybrid equilibria. Next, the analysis shows that the strategic exporting of low-quality producers under informational asymmetry can result in dumping. Moreover, the model shows that the implementation of antidumping measures of foreign countries can lead to a Pareto improvement for the firms and consumers of the home country under some circumstances.

JEL-codes: D82 F10 F13 L15 O12 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2006-06
New Economics Papers: this item is included in nep-cna, nep-int, nep-mkt and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c011_058

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