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Does Trade Weaken Product Quality Standards, Katia Berti, Rodney E. Falvey
Does Trade Weaken Product Quality Standards, Katia Berti, Rodney E. Falvey
Rodney Falvey
In this paper we investigate the effects of trade on the national minimum quality standards applied by two trading partners. We employ a simple partial equilibrium model in which national regulators set a minimum quality standard for a product whose quality is unobservable to consumers prior to purchase. Both producers and consumers can benefit from a minimum standard, but the former prefer a lower standard to the latter. Because producers are organised and consumers are not, the standards set by national regulators will tend to unduly favour producer interests. As always, trade changes the balance of consumer and producer interests …
Trade Liberalisation And Human Capital Adjustment, Rodney E. Falvey, David Greenaway, Joana Silva
Trade Liberalisation And Human Capital Adjustment, Rodney E. Falvey, David Greenaway, Joana Silva
Rodney Falvey
This paper highlights the way in which workers of different age and ability are affected by anticipated and unanticipated trade liberalisations. A two-factor (skilled and unskilled labour), two-sector Heckscher-Ohlin trade model is supplemented with a education sector which uses skilled labour and time to convert unskilled workers into skilled workers. A skilled worker's income depends on her ability, but all unskilled workers have the same income. Trade liberalisation in a relatively skilled labour abundant country increases the relative skilled wage and induces skill upgrading by the existing workforce. The younger and more able unskilled workers are most likely to upgrade. …