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A similarity index of maximum residue level (MRL) regulations is introduced into a variable elasticity of substitution (VES) model to analyze the impacts of MRL regulation similarity on trade flows and social welfare. We specially consider the situation where the requirements set by the importing country are stricter than those of the exporting country. We find that the more similar the MRL regulation between trading partners is, the more substitutable their goods are, and for the consumers that have home preferences for domestic goods, they prefer the imported goods that are more similar to the domestic goods. Our results also show that if the developing countries upward harmonized their MRL standards to developed countries, their exports would expand.

We investigate producers’ choice between geographical indications (GI) and brand advertising (BA) as pure marketing strategies to convey information to consumers. Producers also decide whether or not to select an effort level for improving the quality of their products. We identify conditions under which GI and BA emerge with and without quality effort, depending on the relative costs and effectiveness of marketing strategies and quality improvement. Beyond the conventional equilibrium cases of GI-no-quality-effort and BA-with-quality-effort, we identify several other equilibrium strategies. Under plausible parameter characterization, and in spite of the free-riding problem of collective reputation, producers choose GI and quality improvement efforts at equilibrium. This occurs when the cost of marketing is high, the relative cost of quality effort is low relative to the former, and when the effectiveness of marketing promotions is low. BA without quality improvement also emerges as an equilibrium strategy for the opposite cost structure (low cost of promotion, high cost of effort relative to promotion, and higher effectiveness of promotion). Finally, the joint selection of both instruments BA and GI is examined. We motivate and illustrate our analysis with the European and New-World wine industries.

John C. Beghin is the Marlin Cole Professor of International Agricultural Economics in the economics department at Iowa State University (ISU). He is the former director of the Food and Agricultural Policy Research Institute at ISU which he led from 1999 to 2007. He is a leading scholar on agricultural trade policy analysis, with a long-term interest in nontariff measures. He has held positions at North Carolina State University, the OECD Development Centre, the Institut National de la Recherche Agronomique, the International Labor Office, and the University of Sydney. He has consulted for various international and governmental agencies and private clients including the American Farm Bureau Federation, FAO, OECD, US Army Corps of Engineers, US General Accountability Office, the US Grains Council, and the World Bank among others. He holds a PhD in agricultural and resource economics from the University of California, Berkeley. His research work has appeared in the American Journal of Agricultural Economics, Canadian Journal of Economics, Ecological Economics, Economics Letters, Environment and Development Economics, Health Economics, Journal of Comparative Economics, Journal of Development Economics, Oxford Economic Papers, Review of Economics and Statistics, and World Development, among other journals.