Are Standards Always Protectionist?

Stephan Marette and John C. Beghin

No 10007, Hebrew University of Jerusalem Archive from Hebrew University of Jerusalem

Abstract: We analyze the effects of a domestic standard that reduces an externality associated with the consumption of the good targeted by the standard, using a model in which foreign and domestic producers compete in the domestic good market. Producers can reduce expected damage associated with the externality by incurring a cost that varies by source of origin. Despite potential protectionism, the standard is useful in correcting the consumption externality in the domestic country. Protectionism occurs when the welfare-maximizing domestic standard is higher than the international standard maximizing welfare inclusive of foreign profits. The standard is actually anti-protectionist when foreign producers are much more efficient at addressing the externality than are domestic producers. Possible exclusion of domestic or foreign producers arises with large standards, which may alter the classification of a standard as protectionist or non-protectionist. The paper provides important implications for the estimation and use of tariff equivalents of nontariff barriers.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 33
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hebarc:10007

DOI: 10.22004/ag.econ.10007

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