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International Procurement as a Signal of Export Quality

David Collie and Morten Hviid

Economic Journal, 2001, vol. 111, issue 470, 374-90

Abstract: In 1996, the British Government was accused of a protectionist "buy British" campaign when it awarded a contract for army ambulances to Land Rover. We present a model where the procurement decision of the government affects the perception of consumers in the rest of the world about the quality of the domestic firm's product relative to that of a foreign rival's product. The model compares the outcome when the government's only concern is value for money with the outcome when the government takes account of the effect of its decision on export sales of the domestic firm.

Date: 2001
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Handle: RePEc:ecj:econjl:v:111:y:2001:i:470:p:374-90