Received trade theory presumes an important role for increasing returns to scale, product-differentiation, and quality as determinants of trade flows. In a global world, exports can only be expanded if a nation is competitive in terms of cost and quality of traded products. Food safety and quality systems, such as HACCP or ISO 9000, are indirectly included in international agreements (GATT) as facilitators of trade. These systems may lead to cost leadership and product improvement, which are key factors to higher competitiveness and sustained benefits in international markets. This paper estimates a modified Armington model that links product differentiation and safety programs to market shares, i.e. competitiveness.

Received trade theory presumes an important role for increasing returns to scale, product-differentiation, and quality as determinants of trade flows. In a global world, exports can only be expanded if a nation is competitive in terms of cost and quality of traded products. Food safety and quality s...