Markets with asymmetric information about product quality

Abstract

The purpose of this paper is to show that the existence of asymmetric information regarding the quality of Foreign goods can also generate hysteresis in the behavior of imports. The basic idea is that a temporary appreciation can generate 2 significant modification in the set of information that consumers have regarding the quality of fore goods. This structural change could induce a dynamic change in port demands that cannot be reversed when the exchange rate goes back to its original level.