Reputation of Quality in International Trade: Evidence from Consumer Product Recalls

Jiatong Zhong

No 2022-8, Working Papers from University of Alberta, Department of Economics

Abstract: This paper examines the impact of exporting countries' reputations for product quality on aggregate trade flows. Using a Bayesian learning model, I construct a measure of exporter reputation in which consumers internalize product recalls as signals of poor quality. Structural estimation of the model finds that reputation is important and especially impactful for toys. The market share elasticity of an exporter's reputation is 2.396 for toys. Improving reputation can increase export value, but reputational change is sluggish. Counterfactual exercises confirm that quality inspection institutions are welfare improving.

Keywords: International trade; reputation; Bayesian learning; quality uncertainty; product recalls (search for similar items in EconPapers)
JEL-codes: D83 F14 L15 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2022-03-28
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2022_008

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