Trade and Strategic Regulatory Bias in Monopolistic Industries

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: Regulatory standards, such as on health and safety, may be subject to strategic bias when a country engages in trade. Where regulation is to correct an undersupply of quality by a monopolistic industry, if regulators do not cooperate and …rms can vary standards, there will be a tendency to strategic overregulation, which leads to excessive, rather than inadequate trade. When there is a mixture of horizontal and vertical quality regulations, the profit-shifting motive for protection is less than the previous literature suggests. In this case, contrary to previous findings, mutual recognition agreements lead to underregulation.

Keywords: Trade; oligopoly; regulation; standards; harmonisation. (search for similar items in EconPapers)
JEL-codes: F13 L13 L51 (search for similar items in EconPapers)
Date: 2004-09, Revised 2004-09
New Economics Papers: this item is included in nep-com and nep-int
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