The analogy is not exact as information about quality is not the same as

The analogy is not exact as information about quality

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The analogy is not exact, as information about quality is not the same as information about health risks. 7
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specialized product is likely to be more rewarding (if possibly more risky) than providing undifferentiated raw materials to a wholesale market. Such local monopolies clearly have a consumer cost if the ability to keep out competitors is not offset by the information provision. The study by Zago and Pick cited above also considers the possible impact on market power and shows that when product differentiation increases market power then consumers can lose even when producers gain. So any economic analysis of GIs has to consider the market structure implications both before the GI is granted and that which might emerge as a result of the GI. Trade implications The trade impacts are in the main a direct consequence of the ability or inability of domestic policy to provide the appropriate level of protection and information. If consumers are under-protected at home, through the absence of reliable information about where a product was produced, then there will tend to be a trade distortion. In domestic markets there will be too many imports: in foreign markets the lack of information will adversely hit sales of the product with the geographically-linked quality attribute. If consumers are over-protected in the domestic market then there will be too few imports from other areas and too many exports from the GI-favored producers. Competition in third markets will also be distorted, as protected and un-protected producers compete for the consumer’s allegiance. If the information is valuable then the lack of protection in either the producing or the importing market will distort trade flows. As in other areas of potential non-tariff trade barriers, the key is whether there are appropriate domestic policies in place. Where domestic policy is optimal, liberal trade subject to non-discrimination and national treatment will also be beneficial. Where domestic policy is inadequate, trade is distorted and the inadequacies show up as potential losses to other countries as well as to the mismanaged country. So much of the debate about protectionist GIs in the trade system revolves around whether GIs are being correctly protected on the home market. It is to this issue that we turn. II. The Regulation of GIs in the EU and US Protection of GIs takes place within the country of production and marketing, through the specific regulatory systems developed over time. These are well developed in the EU and the US, as well as other developed countries. A discussion of the EU and US systems gives a flavor for the main mechanisms in use by WTO members. The EU has a sui generis process for granting such protection: the US incorporates the protection in general types of instrument. Other countries can be categorized by which of these two systems they use. Developing countries often have a less well-developed regulatory
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