錦織圭オフィシャルブログ

Title Tainted Food, Low-Quality Products and Trade Abstract This paper examines international trade in tainted food and other low-quality products. We first find that for a large class of environments, free trade is the trading system that conveys the highest incentives to produce non-tainted high-quality goods by foreign exporters. However, free trade is neither a necessary nor a sufficient condition to exclude trade in tainted products. This condition is less easily satisfied if the marginal cost of high-quality production increases, or if errors of testing product quality matter. We also examine cases of image-building investments and sabotage. In particular, sabotage by the domestic firm reduces the foreign firm's incentives to produce high quality, and as a consequence tends to increase import tainting. Keywords: asymmetric information, experience good, product differentiation, sabotage, tainting, trade. JEL Classification: D43, F12, F13, I12 Jean Marie VIAENE Erasmus University Rotterdam, Tinbergen Institute and CESifo Laixun ZHAO Research Institute for Economics and Business Administration Kobe University Rokkodai-cho, Nada-ku, Kobe 657-8501 Japan Phone: (81) 78 803 7036 Fax: (81) 78 803 7059