Do standards improve the quality of traded products? |
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Authors: | Anne-Célia Disdier Carl Gaigné Cristina Herghelegiu |
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Institution: | 1. Paris School of Economics–INRAE;2. UMR 1302 SMART, INRAE
CREATE, Université Laval;3. DG Internal Market, Industry, Entrepreneurship and SMEs, European Commission |
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Abstract: | We examine whether standards raise the quality of traded products. Matching a panel of French firm–product–destination export data with a data set on sanitary and phytosanitary measures and technical barriers to trade, we find that such quality standards enforced on products by destination countries: (i) favour the export probability of high-quality firms provided that their productivity is high enough, (ii) raise the export sales of high-productivity, high-quality firms at the expense of low-productivity and low-quality firms and (iii) increase the quality supplied by firms if their productivity is high enough. We then develop a simple new trade model under uncertainty about product quality in which heterogeneous firms can strategically invest in quality signalling to rationalize these empirical results on quality and selection effects. |
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