Agricultural Economics Department


Date of this Version



Xiong, Bo, and Beghin, John. November 2013. Disentangling demand-enhancing and trade-cost effects of maximum residue regulations. Working Paper No. 13-WP 544. Center for Agricultural and Rural Development, Iowa State University, Ames, Iowa.


Economic Inquiry 52:3 (July 2014), pp. 1190–1203.

doi: 10.1111/ecin.12082

Copyright © 2014 Western Economic Association International; published by Wiley. Used by permission.


Maximum residue levels (MRLs) regulations in plant products can create unnecessary trade barriers on one hand and enhance demand via risk mitigation or quality assurance on the other. We stipulate a generalized gravity equation model to disentangle the effects of MRLs on the import demand and foreign exporters’ supply. Applying the framework to the MRLs on pesticides imposed by high-income OECD countries, we find that the MRLs jointly enhance the import demand and hinder foreign exporters’ supply. In addition, exporters from the less and least developed countries are more constrained by the MRLs than their competitors from the developed world.