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The principle of mutual recognition - A source of divergence ?

Author

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  • TOULEMONDE, Eric

    (Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

Abstract

Governments set numerous norms to protect consumers. Two countries may achieve the same level of protection of their consumers through different specifications. The adaptation costs induced by these differences create barriers to trade. The principle of mutual recognition addresses the problem by ensuring that products lawfully manufactured in one country are acceptable without adaptation in another country. We show that by shifting the transaction costs of adapting to several norms from firms to consumers the principle of mutual recognition creates disparities across countries and is (more) beneficial to larger countries.

Suggested Citation

  • TOULEMONDE, Eric, 2009. "The principle of mutual recognition - A source of divergence ?," LIDAM Discussion Papers CORE 2009075, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2009075
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2009.html
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    More about this item

    Keywords

    technical barriers to trade; mutual recognition; economic geography; home market effect;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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