REES Visiting Speaker Seminar: Dr. Jiatong Zhong, Friday October 14, 2022

Date(s) - 14/10/2022
3:30 pm - 5:00 pm
550 General Services Building, 550 General Services Building University of Alberta , Edmonton Alberta

Title: Reputation of Quality in International Trade: Evidence from Consumer Product Recalls

Speaker: Dr. Jiatong Zhong, University of Alberta, Department of Economics

Date: Friday, October 14, 2022

Time: 3:30 – 5:00 PM

Location: 550 General Services Building

Join Zoom Meeting
https://ualberta-ca.zoom.us/j/96972962096?pwd=Y3BSalJtQkpIeW02SkFHSlhyTG5FZz09

Meeting ID: 969 7296 2096
Passcode: 770978

Abstract:

This paper examines the impact of exporting countries’ reputations for product quality on aggregate trade flows. I link recall incidences retrieved from the Consumer Product Safety Commission to U.S. import data from 1990-2009. Using a Bayesian learning model, I construct a measure of exporter reputation in which consumers internalize product recalls as signals of poor quality. Structural estimation of the model finds that reputation is important and especially impactful for products used by children. The market share elasticity of an exporter’s reputation is 2.4 for toys. Improving reputation can increase export value, but reputational change is sluggish: increasing reputation by 10% can take decades for most exporters. Counterfactual exercises confirm that quality inspection institutions are welfare improving, especially for consumers of toys.


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