Non-tariff measures, quality and exporting: evidence from microdata
ukraine
consultancy
firms
non-tariff-measures
firm-level
European Review of Agricultural Economics, 2020. With Veronika Movchan and Volodymyr Vakhitov.
Domestic non-tariff measures influence firms’ production and import decisions. We introduce non-tariff measures into a model with heterogeneous firms, where they raise production costs but also act as a positive demand shifter — leaving their net effect on the extensive and intensive margins of trade ambiguous. Testing the model’s predictions on Ukrainian food-processing firms in 2008–2013: more SPS regulation on upstream inputs is associated with exports of higher-quality products, while mandatory certification has a negative effect on quality by limiting firms’ access to new technology and equipment.
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Domestic non-tariff measures influence firms’ production and import decisions. We introduce non-tariff measures into a model with heterogeneous firms, where they raise production costs but also act as a positive demand shifter — leaving their net effect on the extensive and intensive margins of trade ambiguous. Testing the model’s predictions on Ukrainian food-processing firms in 2008–2013: more SPS regulation on upstream inputs is associated with exports of higher-quality products, while mandatory certification has a negative effect on quality by limiting firms’ access to new technology and equipment.
Non-tariff measures are often treated in policy debate as pure trade friction, but firm-level evidence shows they also act as a quality signal: compliance raises the price premium exporters can command in destination markets, partially offsetting the compliance cost. We quantify this trade-off using product-level export microdata.
Published in: European Review of Agricultural Economics, 47(2), 719–751