Minimum Quality Standards and Exports

23 Pages Posted: 12 Jun 2015

See all articles by Laura Birg

Laura Birg

University of Goettingen (Göttingen)

Jan Voßwinkel

Nuertingen-Geislingen University

Date Written: June 11, 2015

Abstract

This paper studies the interaction of a minimum quality standard and exports in a vertical product differentiation model when firms sell global products. If ex ante quality of foreign firms is lower (higher) than the quality of exporting firms, a mild minimum quality standard in the home market hinders (supports) exports. The minimum quality standard increases quality in both markets. A welfare maximizing minimum quality standard is always lower under trade than under autarky. A Minimum quality standard reduces profits for the exporting firm. It increases domestic welfare, but reduces welfare in the export market.

Keywords: minimum quality standard, vertical differentiation, exports

JEL Classification: F12, L13, L50

Suggested Citation

Birg, Laura and Voßwinkel, Jan, Minimum Quality Standards and Exports (June 11, 2015). Available at SSRN: https://ssrn.com/abstract=2617210 or http://dx.doi.org/10.2139/ssrn.2617210

Laura Birg (Contact Author)

University of Goettingen (Göttingen) ( email )

Platz der Goettinger Sieben 3
Goettingen, D-37073
Germany
+49 551 39 19686 (Phone)

Jan Voßwinkel

Nuertingen-Geislingen University ( email )

Neckarsteige 6-10
Nuertingen, 72622
Germany

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