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Quality standards for used durables: An indirect subsidy?

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  • Clerides, Sofronis
  • Hadjiyiannis, Costas

Abstract

We construct a theoretical framework to study the impact of quality standards for used durable goods on trade [fl]ows, pro[fi]ts and consumer welfare. We show that asymmetric quality standards generate trade in used goods from high- to low-standard countries while at the same time reducing trade in new goods. Producers in the exporting country bene[fi]t from this change while consumers lose. In the importing country consumers are better off but domestic industry is hurt. These [fi]ndings suggest that quality standards on used goods may be a powerful policy tool whose use should be monitored by the WTO.

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  • Clerides, Sofronis & Hadjiyiannis, Costas, 2008. "Quality standards for used durables: An indirect subsidy?," Journal of International Economics, Elsevier, vol. 75(2), pages 268-282, July.
    • Handle: RePEc:eee:inecon:v:75:y:2008:i:2:p:268-282
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    Cited by:

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    2. Keisaku Higashida, 2012. "Trade in Secondhand Goods, Monitoring of Illegal Trade, and Import Quotas on Legal Trade," Discussion Paper Series 90, School of Economics, Kwansei Gakuin University, revised Jun 2012.
    3. Huang, Jian & Leng, Mingming & Liang, Liping & Luo, Chunlin, 2014. "Qualifying for a government’s scrappage program to stimulate consumers’ trade-in transactions? Analysis of an automobile supply chain involving a manufacturer and a retailer," European Journal of Operational Research, Elsevier, vol. 239(2), pages 363-376.
    4. Chen Liang & Garcia-Medina Cecilia & Wan Rui, 2022. "Trade Liberalization, Consumption Shifting and Pollution: Evidence from Mexico's Used Vehicle Imports," Working Papers 2022-02, Banco de México.
    5. Nguyen, Xuan & Chao, Chi-Chur, 2021. "Revenge consumption, product quality, and welfare," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 495-501.
    6. Clerides, Sofronis, 2008. "Gains from trade in used goods: Evidence from automobiles," Journal of International Economics, Elsevier, vol. 76(2), pages 322-336, December.

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