Title

Disentangling Demand-Enhancing and Trade-Cost Effects of Maximum Residue Regulations

Campus Units

Economics, Center for Agricultural and Rural Development

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

2014

Journal or Book Title

Economic Inquiry

Volume

52

Issue

3

First Page or Article ID Number

1190

Last Page

1203

DOI

10.1111/ecin.12082

Abstract

Maximum residue level (MRL) regulations in plant products can create unnecessary trade barriers on one hand and enhance demand via risk mitigation or quality assurance on the other. We stipulate a generalized gravity equation model to disentangle the effects of MRLs on the import demand and foreign exporters' supply. Applying the framework to the MRLs on pesticides imposed by high-income Organization for Economic Co-operation and Development countries, we find that the MRLs jointly enhance the import demand and hinder foreign exporters' supply. In addition, exporters from the less and least developed countries are more constrained by the MRLs than their competitors from the developed world.

JEL Classification

F17, Q17

Comments

This is a working paper of an article from Economic Inquiry 52 (2014): 1190, doi:10.1111/ecin.12082. Posted with permission.