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The ‘Signaling Effect’ and the impact of high maximum residue limit standards on U.S. vegetable exports

Jun Ho Seok, Sayed Saghaian and Michael Reed ()

Economic Analysis and Policy, 2018, vol. 59, issue C, 150-159

Abstract: This paper investigates the impact of high U.S. maximum residue limit (MRL) standards on U.S vegetable exports to 102 countries utilizing the hierarchical model. MRL, which is one of non-tariff barriers with respect to food safety, is applied to home and foreign countries at the same time. Thus, firms in countries with higher food safety standards are expected to have a competitive advantage from the ‘signaling effect’. The results show that high MRL standards in the U.S. have a positive impact on U.S. vegetable exports, indicating the ‘signaling effect’ from the strict U.S. domestic MRL standards. The results provide policy makers with insights into how strict food safety regulations of the home country can be considered as a catalyst for increasing competitiveness in international markets.

Keywords: Food safety regulation; Maximum residual limits (MRL); Mixed effect model; Vegetable exports; Signaling effect (search for similar items in EconPapers)
JEL-codes: F13 F14 Q18 (search for similar items in EconPapers)
Date: 2018
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