Working Paper: CEPR ID: DP3147
Authors: Akiko Suwa Eisenmann; Thierry Verdier
Abstract: This Paper discusses the issue of regulatory protectionism and its implication for reciprocity and international bargaining on regulation. In a simple two way trade model a la Brander and Spencer, we take into account the three following features of regulatory measures: a) a regulation raises the cost not only of foreign producers but also of domestic producers; b) a regulation also creates a fixed cost which is entirely supported by foreign exporters; c) a regulation may provide a welfare gain valued per se by individuals or to correct some market failure. In this context, we investigate the political economy forces for unilateral regulatory protectionism and the effectiveness of various intra-sectorial bargaining schemes (negotiated reciprocal regulation setting, harmonization or mutual recognition agreements) to ensure reciprocal market access.
Keywords: mutual recognition; standards; trade policy
JEL Codes: F13; L50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Regulatory measures (G18) | Increased production costs (D24) |
| Regulatory measures (G18) | Increased fixed costs for foreign exporters (F69) |
| Regulatory measures (G18) | Welfare gains (D69) |