Product Quality and Environmental Standards: The Effect of an International Environmental Agreement on Tropical Timer Trade

29  January 2015    4:00 pm

Andrea Leiter-Scheiring, University of Innsbruck


wiiw, Rahlgasse 3, 1060 Vienna, lecture hall (entrance from the ground floor)


This article addresses the role of environmental standards harmonization and product quality on international trade. In particular, we examine the impact of the International Tropical Timber Agreement (ITTA) on tropical timber trade. We combine a cross-sectional dataset on bilateral trade flows of tropical timber with information on trading partners' economic and geographical characteristics and their ITTA membership. The empirical analysis is based on a gravity equation, which is estimated by using Heckman's selection model to address the potentially systematic selection of trading partners in trade activity. We find that countries participating in ITTA, and therefore agreed on a common standard, exhibit a significantly and substantially larger trade intensity. Furthermore, we observe that this effect depends on a baseline quality supplied by the exporter and its valuation by the importer. Finally, our counterfactual analysis shows a much stronger increase in trade volume in Northern import markets than in Southern markets.

Andrea Leiter-Scheiring is an Assistant Professor at the University of Innsbruck, Department of Economics. Her fields of interest include environmental economics, international economics, health economics and applied econometrics.

Keywords: Standards harmonization, product quality, gravity equation, sample selection

JEL classification: O19, Q23, Q27, F18, L15