A welfare analysis of the principle of mutual recognition

Eric Toulemonde

European Economic Review, 2013, vol. 60, issue C, 1-16

Abstract: Countries set norms to protect consumers against ill-functioning products. In the absence of coordination, countries can set different norms and still achieve the same level of consumer protection. Such differences in specifications create barriers to trade because exporting firms incur adaptation costs. The principle of mutual recognition addresses the problem by ensuring that products lawfully manufactured in one country are acceptable in other countries, even without adaptation. The principle shifts the transaction costs of adapting to several norms from firms to consumers. We identify the winners and the losers, and we show that this principle is a source of disparity.

Keywords: Technical barriers to trade; Mutual recognition; Economic geography; Home market effect (search for similar items in EconPapers)
JEL-codes: F13 F15 R12 R13 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:60:y:2013:i:c:p:1-16

DOI: 10.1016/j.euroecorev.2013.01.006

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