Standards, Voluntary Labels, and International Trade
Jenny De Freitas and
Lucie Bottega ()
Journal of Agricultural & Food Industrial Organization, 2009, vol. 7, issue 2, 24
Abstract:
We develop a vertical differentiation model for the setting of standards and labeling in an international economy with two countries, North (N) and South (S) under two regimes: Autarky and International Trade. We assume that a firm in country S has a comparative advantage in producing low quality goods while a firm in country N has comparative advantage in producing high quality goods. Under Autarky each country sets a specific standard and the domestic firm behaves as a monopolist. Under International Trade both countries agree on harmonized standards and firms compete in the unified market. We show that standards harmonization is welfare enhancing compared to the Autarky scenario and that the introduction of a national label in country N does not lead to a Pareto improvement in country S. Consumers in both countries will be worse off with the introduction of the label, for low levels of firm S's comparative advantage.
Keywords: standards; certification; eco-label; trade; harmonization (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations:
Downloads: (external link)
https://doi.org/10.2202/1542-0485.1278 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bpj:bjafio:v:7:y:2009:i:2:n:5
Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/jafio/html
DOI: 10.2202/1542-0485.1278
Access Statistics for this article
Journal of Agricultural & Food Industrial Organization is currently edited by Azzeddine Azzam
More articles in Journal of Agricultural & Food Industrial Organization from De Gruyter
Bibliographic data for series maintained by Peter Golla ().