IDEAS home Printed from https://ideas.repec.org/p/ajf/louvlf/2021010.html
   My bibliography  Save this paper

Harmonization, Mutual Recognition or National Treatment: a Melitz approach

Author

Listed:
  • Beguin, Malo

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

Abstract

This paper builds on a Melitz model to compare the welfare effects of three classic legal frameworks used in trade agreements: national treatment, mutual recognition, and harmonization. I specifically deal with two countries setting quality standards in a world where love-for-quality is heterogeneous across country. My results show that harmonization is the best choice in terms of national welfare when exporters are confronted with both lower and higher foreign standards. In addition, with a higher foreign standard, harmonization improves competition in a better way than mutual recognition.

Suggested Citation

  • Beguin, Malo, 2021. "Harmonization, Mutual Recognition or National Treatment: a Melitz approach," LIDAM Discussion Papers LFIN 2021010, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlf:2021010
    as

    Download full text from publisher

    File URL: https://dial.uclouvain.be/pr/boreal/en/object/boreal%3A253076/datastream/PDF_01/view
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    2. Kiminori Matsuyama, 2002. "The Rise of Mass Consumption Societies," Journal of Political Economy, University of Chicago Press, vol. 110(5), pages 1035-1070, October.
    3. Pablo Fajgelbaum & Gene M. Grossman & Elhanan Helpman, 2015. "A Linder Hypothesis for Foreign Direct Investment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(1), pages 83-121.
    4. Gene M. Grossman & Phillip McCalman & Robert W. Staiger, 2021. "The “New” Economics of Trade Agreements: From Trade Liberalization to Regulatory Convergence?," Econometrica, Econometric Society, vol. 89(1), pages 215-249, January.
    5. Venables, Anthony J, 1987. "Trade and Trade Policy with Differentiated Products: A Chamberlinian-Ricardian Model," Economic Journal, Royal Economic Society, vol. 97(387), pages 700-717, September.
    6. Matthieu Crozet & Keith Head & Thierry Mayer, 2012. "Quality Sorting and Trade: Firm-level Evidence for French Wine," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(2), pages 609-644.
    7. Anne‐Célia Disdier & Carl Gaigné & Cristina Herghelegiu, 2023. "Do standards improve the quality of traded products?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(4), pages 1238-1290, November.
    8. Anne-Célia Disdier & Silvio Tai & Lionel Fontagné & Thierry Mayer, 2010. "Bilateral trade of cultural goods," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 575-595, January.
    9. Mary Amiti & Amit K. Khandelwal, 2013. "Import Competition and Quality Upgrading," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 476-490, May.
    10. Joshua Aizenman & Eileen Brooks, 2008. "Globalization and Taste Convergence: the Cases of Wine and Beer," Review of International Economics, Wiley Blackwell, vol. 16(2), pages 217-233, May.
    11. repec:clu:wpaper:0708-12 is not listed on IDEAS
    12. Fontagné, Lionel & Orefice, Gianluca & Piermartini, Roberta & Rocha, Nadia, 2015. "Product standards and margins of trade: Firm-level evidence," Journal of International Economics, Elsevier, vol. 97(1), pages 29-44.
    13. Manova, Kalina & Yu, Zhihong, 2017. "Multi-product firms and product quality," Journal of International Economics, Elsevier, vol. 109(C), pages 116-137.
    14. Melitz, Marc J. & Redding, Stephen J., 2014. "Heterogeneous Firms and Trade," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 1-54, Elsevier.
    15. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    16. John C. Beghin & Jean-Christophe Bureau, 2001. "Quantification of Sanitary, Phytosanitary, and Technical Barriers to Trade for Trade Policy Analysis," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 01-wp291, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    17. John C. Beghin & Jean-Christophe Bureau, 2017. "Quantitative Policy Analysis Of Sanitary, Phytosanitary And Technical Barriers To Trade," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 3, pages 39-62, World Scientific Publishing Co. Pte. Ltd..
    18. repec:hal:pseose:hal-01299757 is not listed on IDEAS
    19. repec:hal:spmain:info:hdl:2441/6apm7lruv088iagm4rv2c33jtg is not listed on IDEAS
    20. Lionel Fontagné & Gianluca Orefice & Roberta Piermartini & Nadia Rocha, 2015. "Product Standards and Margins of Trade: Firm-Level Evidence Product Standards and Margins of Trade: Firm-Level Evidence," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01299757, HAL.
    21. Dimitra Petropoulou, 2013. "Vertical product differentiation, minimum quality standards, and international trade," Oxford Economic Papers, Oxford University Press, vol. 65(2), pages 372-393, April.
    22. David Rezza Baqaee & Emmanuel Farhi, 2020. "Productivity and Misallocation in General Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 105-163.
    23. Costas Arkolakis & Svetlana Demidova & Peter J. Klenow & Andres Rodriguez-Clare, 2008. "Endogenous Variety and the Gains from Trade," American Economic Review, American Economic Association, vol. 98(2), pages 444-450, May.
    24. Chris Edmond & Virgiliu Midrigan & Daniel Yi Xu, 2023. "How Costly Are Markups?," Journal of Political Economy, University of Chicago Press, vol. 131(7), pages 1619-1675.
    25. Weinberger, Ariel, 2020. "Markups and misallocation with evidence from exchange rate shocks," Journal of Development Economics, Elsevier, vol. 146(C).
    26. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8o0n71o2 is not listed on IDEAS
    27. Macedoni, Luca & Weinberger, Ariel, 2022. "Quality heterogeneity and misallocation: The welfare benefits of raising your standards," Journal of International Economics, Elsevier, vol. 134(C).
    28. Maurice Kugler & Eric Verhoogen, 2012. "Prices, Plant Size, and Product Quality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 307-339.
    29. Hallak, Juan Carlos & Sivadasan, Jagadeesh, 2013. "Product and process productivity: Implications for quality choice and conditional exporter premia," Journal of International Economics, Elsevier, vol. 91(1), pages 53-67.
    30. Lugovskyy, Volodymyr & Skiba, Alexandre, 2015. "How geography affects quality," Journal of Development Economics, Elsevier, vol. 115(C), pages 156-180.
    31. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g8o0n71o2 is not listed on IDEAS
    32. Robert C. Feenstra & John Romalis, 2014. "International Prices and Endogenous Quality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 477-527.
    33. repec:hal:pseose:hal-00610947 is not listed on IDEAS
    34. Curzi, Daniele & Olper, Alessandro, 2012. "Export behavior of Italian food firms: Does product quality matter?," Food Policy, Elsevier, vol. 37(5), pages 493-503.
    35. Raphael A. Auer, 2010. "Consumer Heterogeneity and the Impact of Trade Liberalization: How Representative is the Representative Agent Framework?," Working Papers 2010-13, Swiss National Bank.
    36. Anne-Célia Disdier & Silvio Tai & Lionel Fontagné & Thierry Mayer, 2010. "Bilateral trade of cultural goods," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 575-595, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Macedoni, Luca & Weinberger, Ariel, 2022. "Quality heterogeneity and misallocation: The welfare benefits of raising your standards," Journal of International Economics, Elsevier, vol. 134(C).
    2. Curzi, Daniele & Schuster, Monica & Maertens, Miet & Olper, Alessandro, 2020. "Standards, trade margins and product quality: Firm-level evidence from Peru," Food Policy, Elsevier, vol. 91(C).
    3. Anne‐Célia Disdier & Carl Gaigné & Cristina Herghelegiu, 2023. "Do standards improve the quality of traded products?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(4), pages 1238-1290, November.
    4. Chen, Natalie & Juvenal, Luciana, 2016. "Quality, trade, and exchange rate pass-through," Journal of International Economics, Elsevier, vol. 100(C), pages 61-80.
    5. Gaigné, Carl & Laroche Dupraz, Cathie & Matthews, Alan, 2015. "Thirty years of European research on international trade in food and agricultural products," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 91-130, March.
    6. Flach, Lisandra & Unger, Florian, 2022. "Quality and gravity in international trade," Journal of International Economics, Elsevier, vol. 137(C).
    7. Schmidt, Julia & Steingress, Walter, 2022. "No double standards: Quantifying the impact of standard harmonization on trade," Journal of International Economics, Elsevier, vol. 137(C).
    8. Luca Macedoni & Ariel Weinberger, 2021. "Quality Misallocation, Trade, and Regulations," CESifo Working Paper Series 9041, CESifo.
    9. Bastos, Paulo & Silva, Joana, 2010. "The quality of a firm's exports: Where you export to matters," Journal of International Economics, Elsevier, vol. 82(2), pages 99-111, November.
    10. Jäkel, Ina C., 2019. "Product appeal, differences in tastes, and export performance: Evidence for Danish chocolate and confectionery," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 417-459.
    11. Duvaleix, Sabine & Emlinger, Charlotte & Gaigné, Carl & Latouche, Karine, 2021. "Geographical indications and trade: Firm-level evidence from the French cheese industry," Food Policy, Elsevier, vol. 102(C).
    12. Mallick, Sushanta & Marques, Helena, 2016. "Does quality differentiation matter in exporters' pricing behaviour? Comparing China and India," China Economic Review, Elsevier, vol. 40(C), pages 71-90.
    13. Brambilla, Irene & Porto, Guido G., 2016. "High-income export destinations, quality and wages," Journal of International Economics, Elsevier, vol. 98(C), pages 21-35.
    14. Ariel Weinberger & Luca Macedoni, 2023. "International Spillovers of Quality Regulations," Working Papers 2023-10, The George Washington University, Institute for International Economic Policy.
    15. Carl Gaigné & Bruno Larue, 2016. "Public quality standards and the food industry’s structure in a global economy," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(2), pages 141-148, September.
    16. Luca Macedoni, 2022. "Asymmetric information, quality, and regulations," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1180-1198, September.
    17. Melitz, Marc J. & Redding, Stephen J., 2014. "Heterogeneous Firms and Trade," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 1-54, Elsevier.
    18. Sofia Anyfantaki & Sarantis Kalyvitis & Margarita Katsimi & Eirini Thomaidou, 2018. "Export pricing at the firm level with panel data," Working Papers 241, Bank of Greece.
    19. Kan Yue, 2022. "Non‐tariff measures, product quality and import demand," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 870-900, April.
    20. Paulo Bastos & Joana Silva & Eric Verhoogen, 2018. "Export Destinations and Input Prices," American Economic Review, American Economic Association, vol. 108(2), pages 353-392, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ajf:louvlf:2021010. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Séverine De Visscher (email available below). General contact details of provider: https://edirc.repec.org/data/lfuclbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.