Product quality, consumption externalities, and the role of National Treatment

Ida Ferrara, Paul Missios and Halis Yildiz

European Economic Review, 2019, vol. 117, issue C, 1-35

Abstract: Article III of the WTO (National Treatment) limits domestic policy in an effort to curtail protectionist discrimination against foreign products. In this paper, we examine the role of National Treatment and prominent Article XX exceptions when goods are vertically differentiated and generate consumption externalities. We study the domestic policy choices of two countries (first-stage problem) and quantity and price equilibria in two product markets (second-stage problem) under a strict application of Article III and compare them to the policy choices and product market equilibria prevailing when countries can misrepresent external damages and discriminate. While one may expect that high externalities would lead to a greater need for exceptions to equal treatment, we show that this is often not the case and, furthermore, that non-discrimination can lead to a cleaner world environment.

Keywords: National Treatment; Non-discrimination; Product quality; Consumption externalities; Environmental policy; Domestic policy; WTO (search for similar items in EconPapers)
JEL-codes: F12 F18 L15 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292119300613
Full text for ScienceDirect subscribers only

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:eee:eecrev:v:117:y:2019:i:c:p:1-35

DOI: 10.1016/j.euroecorev.2019.04.005

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().