Regulatory protection and the role of International Cooperation
I develop a general equilibrium framework to analyze the welfare consequences of product regulations and their international harmonization. In my model, raising product standards reduces a negative consumption externality, but also increases the marginal and fixed costs of production. When product s...
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
2023
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| Online Access: | https://ink.library.smu.edu.sg/soe_research/2707 https://ink.library.smu.edu.sg/context/soe_research/article/3706/viewcontent/REGULATORYPROTECTION_IC_av.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | I develop a general equilibrium framework to analyze the welfare consequences of product regulations and their international harmonization. In my model, raising product standards reduces a negative consumption externality, but also increases the marginal and fixed costs of production. When product standards are set noncooperatively, the effects of standards on other countries' wages and number of firms are not internalized, giving rise to an international inefficiency. The World Trade Organization's nondiscrimination principle of national treatment only partly addresses this inefficiency. Welfare losses from abandoning national treatment average 2.8%, whereas the maximum welfare gains from efficient cooperation average 11.8%. |
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