Minimum quality standards and exports

Laura Birg and Jan Voßwinkel

No 248, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: This paper studies the interaction of a minimum quality standard and exports in a vertical product differentiation model when firms sell global products. If exante quality of foreign firms is lower (higher) than the quality of exporting firms, a mild minimum quality standard in the home market hinders (supports) exports. The minimum quality standard increases quality in both markets. A welfare maximizing minimum quality standard is always lower under trade than under autarky. A Minimum quality standard reduces profits for the exporting firm. It increases domestic welfare, but reduces welfare in the export market.

Keywords: minimum quality standard; vertical differentiation; exports (search for similar items in EconPapers)
JEL-codes: F12 L13 L50 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-bec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:248

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