Export quality and income distribution in a small dependent economy

This paper provides a simple general equilibrium structure to analyze the two-way causation between choice of export quality by a small open economy and domestic income distribution. The important policy conclusion of our analysis is the following: When direct quality regulations are costly to impose or may not have desirable consequences for income distribution, the target level of export quality may be met through appropriate direct and indirect income redistribution policies such as wage policies or standard trade policies.