Quality Signaling and International Trade in Food Products

Jean-Christophe Bureau, Estelle Gozlan () and Stéphan Marette ()

Staff General Research Papers from Iowa State University, Department of Economics

Abstract: Focusing on the issue of food safety, the authors consider a framework of repeated purchases under the scenario of imperfect information on product quality (adverse selection and experience goods). A firm in a northern country can more easily detect tainted products than can a southern one. When imports are banned, the northern firm does not always signal the actual quality of its products. Competition from imports may lead the northern firm to test the quality of its products as a way to differentiate itself from foreign competitors. Consumers benefit from the disclosure of information on quality, even though borders are open to products of uncertain quality. However, competition from imports also increases the cost of signaling high quality. This can be detrimental to the welfare of the importing country when the cost of detection is high.

JEL-codes: A1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr
Date: 2001-09-04
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Related works:
Working Paper: Quality signaling and international trade in food products (1999)
Working Paper: Quality Signaling and International Trade in Food Products (2001)
Working Paper: Quality Signaling and International Trade in Food Products (1999)
Working Paper: Quality Signaling and International Trade in Food Products (2001)
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Persistent link: http://EconPapers.repec.org/RePEc:isu:genres:2002

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