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Trade-Inducing Quality Standards for Used Durables

Author

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  • Sofronis Clerides
  • Costas Hadjiyiannis

Abstract

We construct a theoretical framework to study the impact of asymmetric quality standards on used durable goods on trade flows, profits and consumer welfare. We show that asymmetry in quality standards generates trade in used goods from high to low standard countries while at the same time reducing trade in new goods. The industry in the exporting country benefits from this change while consumers lose out. Consumers in the importing country are the biggest beneficiaries, but domestic industry is hurt. These results suggest that quality standards on used goods are a powerful policy tool whose use should be monitored by the WTO.

Suggested Citation

  • Sofronis Clerides & Costas Hadjiyiannis, 2004. "Trade-Inducing Quality Standards for Used Durables," University of Cyprus Working Papers in Economics 5-2004, University of Cyprus Department of Economics.
    • Handle: RePEc:ucy:cypeua:5-2004
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    References listed on IDEAS

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    Cited by:

    1. Sofronis Clerides, 2004. "Gains from Trade in Used Goods: Evidence from the Global Market for Automobiles," University of Cyprus Working Papers in Economics 6-2004, University of Cyprus Department of Economics.
    2. Birg, Laura & Voßwinkel, Jan S., 2015. "Minimum quality standards and exports," University of Göttingen Working Papers in Economics 248, University of Goettingen, Department of Economics.

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    More about this item

    Keywords

    quality standards; durable goods; used durables; trade in used goods;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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