We examine the determinants of the equilibrium level of product safety and the pattern of trade in a two country model where there is a safe product and a risky product. We compare the role of systems of consumer liability, producer liability, and setting of minimum standards for determining the level of product safety. With complete information and no transactions costs, changes in the degree ...

Under the North American Free Trade Agreement (NAFTA) tariffs on U.S. potato imports to Mexico were phased out by 1993. Citing phytosanitary issues, in 1996, the Mexican government placed quantitative restrictions on U.S. potato imports and restricted their import only to designated border areas. This article estimates the welfare cost of restricting U.S. potato imports into Mexico. We find tha...

Risk adjustment is a common policy for mitigating the effects of adverse selection when government regulation limits insurer ability to rate consumers according to their expected risks. I study the social welfare implications of risk adjustment. I first show theoretically that risk adjustment may reduce social welfare because it can increase the expected risk of consumers who select into the in...

Previous analyses of fat taxes have generally worked within an empirical framework in which it is difficult to determine whether consumers benefit from the policy. This note outlines on simple means to determine whether consumers benefit from a fat tax by comparing the ratio of expenditures on the taxed good to the weight effect of the tax against the indivi­ dual’s willingness to pay for a one...

The dominance of English language content on the Internet raises a question how consumer bilingualism in given country affects amount home and country's welfare. We address this by studying two-sided market competition between foreign domestic distribution platform small open economy. On one hand, has benefit increasing cross-side network externalities concentration platform, which increases co...

Pricing over multiple periods under forward-looking, strategic consumer purchasing behavior has received significant recent research attention; however, whether consumers actually benefit from this behavior and would voluntarily choose to be strategic has not been previously considered. We explore this question, and show that many consumers have lower surplus if they are strategic than if they ...

The purpose of this paper is to estimate the welfare cost of inflation in Iran. We first use the long-horizon regression approach developed by Fisher and Seater (1993) to obtain an estimate of the inflation rate elasticity of money demand and then the Baily’s consumer surplus approach to calculate the welfare cost function. The results show that reducing inflation rate from 40% to 0% increases ...

We study the welfare effects of an increase in firms’ information about consumer naivete in a simple reduced-form model in which competitive firms can introduce distortionary fees that naive consumers ignore when making purchase decisions. We establish that our model captures many markets—including those for credit, banking, hotels, gambling, and mobile phones—in which consumer naivete has been...

This article develops a framework for assessing the implementation of standards in context multiple negative externalities resulting from meat production. The is applied to introduction New Dutch Retail Standard broiler market, standard on animal welfare initiated by private sector with national coverage. results show that this did not lower producer, retailer, and consumer welfare; rather, soc...