Harmonization, Mutual Recognition or National Treatment: a Melitz approach

Malo Beguin

No 2021010, LIDAM Discussion Papers LFIN from Université catholique de Louvain, Louvain Finance (LFIN)

Abstract: This paper builds on a Melitz model to compare the welfare effects of three classic legal frameworks used in trade agreements: national treatment, mutual recognition, and harmonization. I specifically deal with two countries setting quality standards in a world where love-for-quality is heterogeneous across country. My results show that harmonization is the best choice in terms of national welfare when exporters are confronted with both lower and higher foreign standards. In addition, with a higher foreign standard, harmonization improves competition in a better way than mutual recognition.

Pages: 34
Date: 2021-11-01
New Economics Papers: this item is included in nep-int
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