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Contributions to Economics
This paper examines the policy interactions between two governments in an international duopoly model with vertical product differentiation, in which the foreign firm produces the low-quality good and exports to the home market. Whether the home government imposes a specific tariff or not, the foreign government has an incentive to set a minimum quality standard (MQS) on its exports, and the level of MQS decreases as the specific tariff increases. If the cost asymmetry between two firms isdoi:10.1007/3-7908-1630-2_16 fatcat:zryi53523zem3pomxtbi2dsbs4