Assessing the role of geographical indications in affecting the quality of imports

Abstract

Geographical indications (GIs) aim to protect the names of specific high-quality products (food and wine) to preserve and promote the uniqueness linked to their geographical origin and traditional know-how. EU and extra-EU countries register domestic products with GIs. This study disentangles the effects of such registrations on the quality of imports using country-level product import data for the fruit, vegetable, coffee, tea, and spice sectors. Our results show that the registration of domestic products as GIs enhances the quality of imported goods only if the importing country has a lower level of quality of domestic production. The introduction of GIs into high-quality domestic markets can discourage import quality upgrades. This is because domestic producers may prefer to compete for quality rather than price, and imported goods represent a less expensive alternative to high-quality national goods for consumers. Conversely, in countries where domestic product quality is lower, the introduction of GIs may enhance import quality upgrading because the diffusion of GIs induces domestic consumers to become more demanding in terms of quality for foreign products.