EconPapers    
Economics at your fingertips  
 

Quality Standards, Industry Structure, and Welfare in a Global Economy

Carl Gaigne and Bruno Larue

American Journal of Agricultural Economics, 2016, vol. 98, issue 5, 1432-1449

Abstract: We study the impact that mimimum quality standards have on industry structure, trade, and welfare when firms can develop their own private standard with a higher quality than the public standard. We introduce vertical differentiation in a firm-based trade model in which firms differ in terms of their productivity and non-cooperatively select the quality and price of their product. A higher public standard increases prices set by constrained and unconstrained firms, but the effect on firms’ output is generally ambiguous for both types of firms. The most productive firms raise their private standard and enjoy higher profits at the expense of less productive firms. A public standard can increase welfare, especially when there is a high concentration of low productivity domestic firms because of a better allocation of resources.

Keywords: Public standard; private standard; product quality; entry/exit; welfare (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1093/ajae/aaw039 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Quality standards, industry structure and welfare in a global economy (2016)
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:oup:ajagec:v:98:y:2016:i:5:p:1432-1449.

Access Statistics for this article

American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2019-08-11
Handle: RePEc:oup:ajagec:v:98:y:2016:i:5:p:1432-1449.