MetaTOC stay on top of your field, easily

Bane or Boon: The Effects of Daigou (Buying on Behalf) in an Open Economy

, ,

Economic Record

Published online on

Abstract

["Economic Record, EarlyView. ", "\nPrompted by advancements in technology, particularly affordable or complimentary livestream features on mobile applications, a novel form of international trade—termed ‘daigou’—has emerged. In this practice, individual agents in developed countries (the North) purchase domestically produced goods on behalf of customers in developing countries (the South), significantly disrupting the international trade dynamics between the northern and southern regions. We developed an international quality demand model to study the economic implications of daigou, which is characterized by low trade costs. We revealed that this practice enhances social welfare in the North but may adversely affect the profitability of producers in the North and social welfare in the South. These outcomes are contingent upon various factors, including market sizes, North–South tariff rates and product quality. Additionally, the practice promotes the liberalisation of trade relations of the South with the North. The study offers valuable insights that can shape public policies.\n"]