Import controls under imperfect information

Shabtai Donnenfeld, Shlomo Weber, Uri Ben-Zion

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

This paper examines the effects of governmentally imposed quality controls upon an industry which consists of a domestic monopolist which is facing competition from a large number of foreign firms. Domestic consumers know the quality of the home good, while their information about the quality of imports is imperfect. Although minimum quality standards are directly imposed on imports, they indirectly affect the behavior of the domestic monopolist. The domestic firm raises quality but its price response is ambiguous. Furthermore, its market share and profitability decline. Import controls harm some consumers and benefit others. We state conditions which lead to a lower national welfare.

Original languageEnglish
Pages (from-to)341-354
Number of pages14
JournalJournal of International Economics
Volume19
Issue number3-4
DOIs
StatePublished - 1 Jan 1985
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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