Trade flow of U.S. recalled consumer products: a gravity model analysis

Abstract

This paper examines the hypothesis that the trade flow of recalled products and harm caused by recalled products will conform to economic theory in a similar way as the flow of goods in general. A Bergstrand-based gravity model is used in the analysis. My application uses a novel data set that includes measures of U.S. consumer product recalls from 2006 and 2007. The results of the analysis show that the flow of recalled goods corresponds to theory. The type of consumer products imported into the U.S., as well as those later recalled, are found to tend to be labor intensive. Better exporting country institutions corresponded to a relatively greater amount of goods later recalled.