EconPapers    
Economics at your fingertips  
 

Imperfect information, Effectiveness of Regulation and Trade: High quality Credence Goods and Developing Exporters

Nadia Cuffaro ()

No 2008-01, Working Papers from Universita' di Cassino, Dipartimento di Scienze Economiche

Abstract: The paper provides a broad framework of analysis for the relationship between imperfect information on goods’ quality, regulation and trade and presents a model on the relationship between internal regulation on quality and credence goods exports, focusing on developing exporters. In the model expected quality is a function of consumers’ beliefs about the effectiveness of regulation. Foreign consumers, who cannot observe regulation as closely as domestic ones, may partly base their expectations on the level of development of the exporting country , as a proxy for the effectiveness of its regulation of product quality. Low effectiveness and low consumers’ trust may cause a failure in the market for high quality, and there may be a trap of underdevelopment and no high quality exports. The policy implications are that increasing the effectiveness of regulation improves export prospects and pursuing the harmonization of standards is a better strategy than mutual recognition, since the latter does not address the trust problem between countries with vastly different income levels. NGOs have a role, since when the standard on a credence attribute is established and monitored by separate, non national, entities the national stereotype problem may be bypassed.

JEL-codes: L15 F13 O12 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2008-01
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://dipeg-wpe.unicas.it/dipse/files/wp200801.pdf Full text (application/pdf)

Related works:
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:css:wpaper:2008-01

Access Statistics for this paper

More papers in Working Papers from Universita' di Cassino, Dipartimento di Scienze Economiche Dipartimento di Scienze Economiche Via S. Angelo Loc. Folcara 03043 Cassino (FR) - Italy. Contact information at EDIRC.
Bibliographic data for series maintained by Gennaro Zezza ().

 
Page updated 2020-10-18
Handle: RePEc:css:wpaper:2008-01