High quality exports and consumers’ trust: a development perspective

Nadia Cuffaro () and Marina Di Giacinto
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Marina Di Giacinto: University of Cassino

No 2011-04, Working Papers from Universita' di Cassino, Dipartimento di Economia e Giurisprudenza

Abstract: We analyze the impact of the effectiveness of internal regulation for the development of internal and export markets for credence goods, particularly for a developing country which is an exporter (or a potential exporter). In the model, since goods of actual different quality can be sold as high quality goods, expected quality is a function of consumers’ beliefs about the effectiveness of regulation. Foreign consumers, who cannot observe foreign regulation as closely as domestic ones, may partly base their expectations on the level of development of the exporting country. Low effectiveness, negative stereotype 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 main policy implications are that increasing the effectiveness of regulation improves export prospects; standard setting and enforcement by external actors, such as supermarkets, or NGOs in the case of certain niche markets, is likely to be beneficial

JEL-codes: F13 L15 O12 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2011-06-21
New Economics Papers: this item is included in nep-int and nep-reg
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