Join Luca Macedoni in this webinar that explores the impact of quality regulations on global trade.
This presentation investigates the positive international spillover effects of non-discriminatory product regulations, such as quality standards. It will incorporate regulations into a multi-country general equilibrium framework with firm heterogeneity and variable mark-ups. The research models regulations as a fixed cost that any firm selling to an economy must pay, consistent with stylised facts that are presented. It is demonstrated that, in the presence of variable mark-ups, the fixed cost generates a positive spillover effect on the rest of the world, as it induces entry of high-quality firms and it improves the terms of trade of the non-imposing countries. The author argues that the benefits of such regulations are not fully realised under non-cooperative policy settings, leading to a call for international cooperation in setting regulations. The research estimates the model and applies its gravity formulation to quantify the global welfare consequences of altering regulatory policies, the extent of the positive externalities across countries, the effects of cooperation, and the comparison with further tariff liberalisation. The analysis reveals that the entry of new high-quality firms, rather than changes in terms of trade, serves as the main quantitative driver of international spillovers.
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Sklodowska-Curie grant agreement No. 101031139.
Any dissemination of the results of this event, reflect only the presenters’ view. The European Commission is not responsible for any use that may be made of the information it contains.
This event is co-organised with the Vienna Institute for International Economic Studies.