Food safety, reputation and trade

I develop a simple dynamic model of reputation-based transactions between a buyer in one country and a supplier in another. I use the model to study the impact of a more stringent regulation on the buyer optimal purchase volume within an existing buyer-seller partnership. A more stringent standard affects the volume of trade in two intuitive ways: directly, a stricter standard affects the supply of quality goods and indirectly through reputation. I refer to the former effect as the regulation effect, and to the latter as the reputation effect. I show that, whereas most of the empirical literature has so far assumed that more stringent standards would be likely to reduce trade, the net effect is in fact non-monotone, even without taking into account endogenous technological upgrading in the supplier country. It varies with the belief the buyer holds about his seller at the time the change in regulation takes place. For both very low and very high seller's reputation, the reputation effect is negligible vis-à-vis the regulation effect. For intermediate levels of the supplier's reputation, reputation has the power to significantly mitigate the direct negative effect of a more stringent sanitary standard on trade. This result has significant implications for developing countries, for which access to developed countries markets is by and large, said to be disproportionately constrained by stricter standards.Product quality ; food safety ; reputation ; agricultural trade

What makes a good label? : the effect of wine label design on product evaluation and purchasing behaviour : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Marketing at Massey University, Albany, New Zealand

Companies spend billions annually on packaging and labelling, yet little is known about how and why specific features of package design influence consumer responses. This thesis identifies, across two projects, what wine label elements or themes should be used, where and when. First, while the use of fantasy themes is increasing across product categories, it is unclear how consumers react to fantasy labels. Across five studies, the results unite seemingly contradicting theories predicting the effects of fantasy labels on product evaluation and purchasing behaviour by uncovering an important boundary condition: product quality signal, in line with the principle of hedonic dominance. The results suggest that for low quality products, fantasy labels backfire (consistent with research on metacognition). For products average in quality, fantasy and non-fantasy labels do not differ in their performance. Yet, in the presence of a high quality signal, fantasy labels impact product evaluation and purchasing behaviour positively. This positive effect is sequentially driven by the evocation of the imaginary and affect, in line with research on mental simulation. Second, it is unclear to what extent elements of wine label design affect sales relative to other marketing mix effects. Specifically, we use wine transactional data for 127 SKUs across two liquor stores in New Zealand, covering 105 weeks. The findings suggest that some specific label elements have strong effects on sales. Specifically, extra text, as a quality cue, has the strongest positive effect. Overall, after price, the combination of image(s) and extra text has the strongest (negative) effect on sales. In line with research on processing fluency, this research also shows whether and when to use simple versus complex elements (typeface, label structure, mode of information). This thesis has important implications for wine companies and retailers

Financial development and survival of African agri-food exports

This paper investigates the link between export survival of agri-food products and financial development. It tests the hypothesis that financial development differentially affects the survival of exports across products based on their need of external finance. The authors test whether exports of products that are relatively more reliant on external capital survive longer when initiated in more financially developed countries. The results suggest that agri-food products that require more external finance indeed sustain longer in foreign markets if the exporting country is more financially developed.Food&Beverage Industry,Economic Theory&Research,Markets and Market Access,Labor Policies,Debt Markets

A second look at the pesticides initiative program : evidence from Senegal

This paper investigates whether the Pesticides Initiative Program has significantly affected the export performance of Senegal'shorticulture industry. The authors apply two main microeconometric techniques, difference-in-differences and matching difference-in-differences, to identify the effect of the Pesticides Initiative Program on exports of fresh fruits and vegetables. They use a unique firm-level dataset containing data on sales, employment, and exports by product and destination markets, as well as firm enrolment year, over 2000-2008. The results suggest that wile the program had no significant effect on exports pooled over all products and destinations, it had a positive effect when considering fresh fruits and vegetables exports to the European Union.E-Business,Economic Theory&Research,Markets and Market Access,Microfinance,Free Trade

Finance, Comparative Advantage, and Resource Allocation

The paper examines the interplay between financial development and comparative advantage in shaping the survival of exporting firms on foreign markets. Exports suffering from comparative disadvantage (labour-intensive products from capital-abundant countries) survive shorter on the competitive US market. Crucially, the pattern is stronger if the exporting country has a well-developed banking system. This suggests a positive role for finance in pushing the manufacturing sector towards export composition congruent with the comparative advantage of a given country. A strong financial sector can thus mitigate misallocation of resources arising from inefficient exporting patterns.financial development; resource misallocation; comparative advantage

Financial dependence and intensive margin of trade

This paper analyze the survival of developing countries exports using the methodology developed by Rajan and Zingales (1998). An exporter faces multiple obstacles when entering new markets: imperfect information about the market, quality requirements of the importing countries, trade and marketing costs etc. Only firms with sufficient financial resources and high productivity can enter the international market. (Melitz 2003; Chaney 2005; Berman 2009). Therefore, one can expect exporters from a country with a well functioning financial markets to survive longer than exporters from a country where the financial markets are underdeveloped. In particular, we check if the exports of industries heavily dependent on external finance survive longer in foreign markets when produced in countries with developed financial system.financial development ; financial dependence ; trade duration

Gravitational billiards bouncing inside general domains -- foci curves and confined domains

A massive particle under the influence of a constant gravitational force that is bouncing inside an ideal reflecting mirror described by some function $f(x)$ is considered. For the associated flight trajectories we derive the parametric curves, named foci curves. All foci points of the parabolas for a given initial position and energy lie on these curves. From these foci curves the associated flight parabola envelopes are derived resulting, together with the mirror surface, in a confined domain for all possible particle trajectories in the non-periodic orbit case. The general results are briefly discussed and visualized for three concrete mirror surfaces.Comment: 14 pages, 9 figure