Department of Economics and Business Economics

Ray Zhang

Judicial Quality, Input Customisation, and Trade Margins: The Role of Product Quality

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review


  • Xiaomin Cui, Chinese Academy of Social Sciences, China
  • Miaojie Yu, National School of Development, Peking University, China
  • Rui Zhang
We study how the contracting environment affects the quality of trade. A better contracting environment not only induces specialisations in industries intensively using customised inputs, but also causes quality upgrading of domestic varieties and tougher competition in these industries. We incorporate these effects into a Ricardian model with customised input and product quality. Our model predicts that better judicial quality raises a country’s import prices and quality more in contract-intensive products, but has no impacts on its export prices or quality. We empirically confirm these predictions, and find that rising judicial quality is associated with increasing specialisations in contract-intensive industries.
Original languageEnglish
JournalEconomic Journal
Pages (from-to)926-952
Publication statusPublished - Apr 2022

    Research areas

  • judicial quality, contracts, customised input, quality, trade margins

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