In 2007 there were a number of product safety incidents with Chinese exports that garnered mediattention worldwide. There were widespread calls for tightening of regulatory barriers or outright bans onimports of Chinese goods. Consumer confidence in Chinese goods suffered a serious decline and exportsfell. The number of Chinese products with safety problems was small. However, Chinese firms where no afety problems had been discovered suffered reductions in export sales collateral damage. This market failure is investigated and the results suggest that the efficient solution to correcting it requires cooperation etween the Chinese government and importing country governments
Journal of World Trade