Organic certification systems and international trading of agricultural products in gravity models

Recent literature about gravity models points out the importance of institutional frictions in the international market of agricultural products beyond the traditional economics variables as transport costs reducing the mass of trade in bilateral relationships. In particular, previous contributions stress that harmonization of food standards could decrease transaction costs in trading relationships by stimulating international market. In a previous work we hypothesized that the acknowledgment of equivalence in organic standards may represent a reliable signal of affinity in bilateral relationships which may be useful to identify areas in which transaction costs for both conventional and organic standards are lower. This article represents a step forward, since it assumes that the acknowledgment of equivalence in identifying areas with lower transaction costs in trading relationships for the whole produce could be a strong assumption that may be relaxed through the hypothesis that affinity in market exchange could be simply signaled by the presence of organic standards for the involved countries. Therefore, in our analysis we test if countries setting specific rules for organic standards are more “affine” in trading relationships because of a low common cultural, law and political distance but also if differences in organic standards themselves can be useful to differentiate the level of affinity among regions. Interesting insights for policy makers about the identification of relevant variables for international business arise from an econometric analysis.Gravity models, organic standards, transaction costs, international market, agricultural trade, food products, Agricultural and Food Policy, Research Methods/ Statistical Methods, Q11, Q13,

Bilateral relationships governed by incomplete contracts

This paper explores implications of interactions between noncontractibility of quality, multidimensional hidden information, switching costs and the frequency of trade on the terms of contracts in a buyer-seller setup. Optimal contractual arrangements are shown to consist of a sequence of two contracts with nondecreasing prices and nonincreasing quality and volume of exchange. In the absence of switching costs, an increase in the frequency of trade is absorbed by the first contract. For high frequencies of trade, switching costs may enhance welfare by improving the efficiency of screening through a better allocation of time between contracts. (JEL: L 14)

The GATT Uruguay Round: Its Significance for U.S. Bilateral Trade with Korea and Taiwan

This article reviews the choreography of U.S. trade policy, as reflected in the U.S. government\u27s efforts to reconcile its objectives in the Uruguay Round with its actions in its bilateral relationships with Korea and Taiwan. It illustrates how developments in four key areas of the Round - protection of intellectual property, services, investment, and agriculture - and in bilateral trade negotiations are intended to be, and can be, complementary rather than contradictory

Exclusive dealing and vertical integration in interlocking relationships

We develop a model of interlocking bilateral relationships between upstream firms (manufacturers)that produce differentiated goods and downstream firms (retailers) that compete imperfectly for consumers. Contract offers and acceptance decisions are private information to the contracting parties. We show that both exclusive dealing and vertical integration between a manufacturer and a retailer lead to vertical foreclosure, to the detriment of consumers and society. Finally, we show that firms have indeed an incentive to sign such contracts or to integrate vertically

研究

textabstractThis paper provides a detailed case study and theoretical explanation for one of the least appreciated bilateral relationships of democratic South Africa. It analyses South Africa's post-apartheid relations with Iran as a case study to illustrate and discuss the contradictory principles that appear to guide South Africa's foreign policy. South Africa's tempered reaction to Iran's nuclear programme is in contradiction with its non-proliferation stance, but can be understood by looking into the ideology of the ruling African National Congress

On the Optimality of Privacy in Sequential Contracting

This paper considers an environment where two principals sequentially contract with a common agent and studies the exchange of information between the two bilateral relationships. We show that when (a) the upstream principal is not personally interested in the decisions taken by the downstream principal, (b) the agent’s exogenous private information has a "vertical" structure in the sense that the sign of the single crossing condition is the same for upstream and downstream decisions, and (c) preferences in the downstream relationship are separable, then the upstream principal optimally commits to full privacy, whatever price the downstream principal is willing to pay to receive information. On the contrary, when any of the above conditions is violated, the upstream principal may find it strictly optimal to disclose a (noisy) signal of the agent’s exogenous type and/or the result of his upstream contractual activity, even if she can not make the downstream principal pay for the information she receives. We also show that disclosure does not necessarily reduce the equilibrium payoff of the agent and may lead to a Pareto improvement for the three players.contractual and informational externalities, mechanism design, optimal disclosure policy, sequential common agency, exogenous and endogenous private information