The principle of mutual recognition - A source of divergence ?

Eric Toulemonde

No 2009075, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Governments set numerous norms to protect consumers. Two countries may achieve the same level of protection of their consumers through different specifications. The adaptation costs induced by these differences create barriers to trade. The principle of mutual recognition addresses the problem by ensuring that products lawfully manufactured in one country are acceptable without adaptation in another country. We show that by shifting the transaction costs of adapting to several norms from firms to consumers the principle of mutual recognition creates disparities across countries and is (more) beneficial to larger countries.

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: 2009-11-01
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2009075

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