Are Standards Always Protectionist?

(2007) Are Standards Always Protectionist? Iowa State University

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Abstract

We analyze the effects of a domestic standard that reduces an externality associated with the consumption of the good targeted by the standard, using a model in which foreign and domestic producers compete in the domestic good market. Producers can reduce expected damage associated with the externality by incurring a cost that varies by source of origin. Despite potential protectionism, the standard is useful in correcting the consumption externality in the domestic country. Protectionism occurs when the welfare-maximizing domestic standard is higher than the international standard maximizing welfare inclusive of foreign profits. The standard is actually anti-protectionist when foreign producers are much more efficient at addressing the externality than are domestic producers. Possible exclusion of domestic or foreign producers arises with large standards, which may alter the classification of a standard as protectionist or non-protectionist. The paper provides important implications for the estimation and use of tariff equivalents of nontariff barriers.

Item Type: Departmental Report
Keywords: externality, nontariff barriers, protectionism, safety, standard, tariff equivalent.
Subjects: Business and industry > Economic development
Business and industry > Trade and commerce
Business and industry > Manufacturing
Business and industry > Economic forecasts
ID Code: 5306
Deposited By: Margaret Barr
Deposited On: 28 Aug 2007
Last Modified: 28 Aug 2007
URI: http://publications.iowa.gov/id/eprint/5306

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