Do Quality Regulations Enhance Welfare? A Comment on Gaigne and Larue (2016)

Abstract

Gaigne and Larue (American Journal of Agricultural Economics 98:1432-1449) examined the welfare implications of quality regulations within an international trade context, employing a general-equilibrium framework. Their study uses a CES (Constant Elasticity of Substitution) model and finds that stricter public standards might improve welfare. However, this conclusion was actually derived from a partial-equilibrium analysis. This note conducts a thorough general-equilibrium analysis and demonstrates that their anticipated outcome does not hold within their CES framework.

Keywords: Quality regulations, CES, welfare

JEL Classification: L50, L13, F12