| Registro completo |
| Provedor de dados: |
AgEcon
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| País: |
United States
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| Título: |
How Cool is C.O.O.L.?
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| Autores: |
Dinopoulos, Elias
Livanis, Grigorios T.
West, Carol Taylor
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| Data: |
2006-02-09
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| Ano: |
2005
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| Palavras-chave: |
Country-of-origin labeling
Protection
Product safety
Welfare
Food Consumption/Nutrition/Food Safety
International Relations/Trade
F10
F13
L15
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| Resumo: |
This paper develops a partial equilibrium model of a small open-economy producing and trading an unsafe product that is supplied by perfectly competitive producers. The presence of product safety considerations, in this case risks to health, introduces a wedge between the market prices producers receive and the higher risk-adjusted prices consumers respond to. The size of the wedge depends positively on the per-unit cost of illness and the proportion of unsafe units embodied in the parent risky product. The model is used to analyze the welfare effects of trade with and without a country-of-origin labeling (COOL) program. Assuming imports are less safe than domestic production, the welfare gains from trade in the absence of COOL are ambiguous and may justify the imposition of a trade ban. Even if a full ban does not improve welfare, some restriction of trade is always welfare-enhancing. These outcomes derive from an informational distortion that prevents consumers from distinguishing the different country-specific risks embodied in the foreign and domestic products resulting in a pooling equilibrium. The presence of a COOL program removes the informational distortion and generates a welfare maximizing separating equilibrium in which the safer (domestic) product commands a higher market price. In the presence of a COOL program, more trade caused by a reduction in protection is better than less trade.
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| Tipo: |
Working or Discussion Paper
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| Idioma: |
Inglês
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| Identificador: |
19842
http://purl.umn.edu/15658
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| Editor: |
AgEcon Search
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| Relação: |
University of Florida>International Agricultural Trade and Policy Center>Working Papers
Working Paper WPTC 05-11
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| Formato: |
38
application/pdf
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