Trade in Counterfeit Organic Products

Kwan E. Choi ()
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Kwan E. Choi: Iowa State University

A chapter in International Trade and Economic Dynamics, 2009, pp 123-138 from Springer

Abstract: This chapter investigates trade in organic and nonorganic products between the North and the South. The labor-abundant South exports the labor-intensive organic product to the North, but imports from the South contain some counterfeits. In the absence of labels, consumers cannot differentiate between the two products using naked eye. When properly labeled, organic and nonorganic products are close substitutes, but the former commands a higher market price. Accordingly, traders have an incentive to pass off the nonorganic product as an organic product. There is no need for the government to regulate the production of organic or nonorganic products. If law enforcement is costly, controlling counterfeit imports is socially optimal, but total elimination of counterfeits or an import ban is not socially optimal.

Keywords: Nash Equilibrium; Organic Product; Price Taker; Conventional Product; Close Substitute (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-540-78676-4_12

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DOI: 10.1007/978-3-540-78676-4_12

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