Quality Changes and the Volume of Trade: A Geometric Approach

Abstract

This paper investigates the relationship between product quality and the volume of trade using the characteristic approach in the context of a simple general equilibrium trade model. It is shown that increasing the quality of the import good induces an increase (fall) in the volume of imports when the import demand is elastic (inelastic). It is also shown that the volume of trade is not necessarily reduced when the quality of the import good is uncertain. Given the situation in the world wheat market, these results provide some support for Canada's concerns over quality and the reliability of its grading and inspection services.Ce papier a pour but d'analyser les effets d'un changement dans la qualite des importations sur le volume des importations de mCme que sur la rtpartition de la production domestique. Le modkle utilisC en est un d'tquilibre gtntral et exploite les avantages d'une fonction d'utilitt ayant des caracttristiques comme arguments. I1 est dtrnontrt que I'effet d'un changement de qualit6 sur le volume des importations dipend de I'tlasticite pour la demande des importations. Le volume d'importations dans un environnement incertain n'est pas ntcessairement moins tlevt que dans une situation ou il n'y a pas d'incertitude dans la qualite des importations. Nos rtsultats, 1orsqu'appliquCs au march6 mondial du blC, supportent la position du Canada en ce qui a trait a la qualite de son ble et I'intCgritC de ses services d'inspection et de classement.

Sunn Pest Control Policies and Effect of Sunn Pest Damage on Wheat Quality and Price in Turkey

“…There have been a number of applications for understanding quality characteristics of agricultural commodities (Larue and Lapan, 1990;Prescott and Puttock, 1990;Uri and Hyberg, 1996;Smith, 2000). The empirical application of characteristics of goods is represented by a hedonic price function where commodity price is a function of the good and its quality characteristics.…”