Does Quality Matter in the Iron and Scrap Trade?

Discussion Papers


by MICHIDA Etsuyo , Cemal Atici, and KOJIMA Michikazu

March 2011


This paper sheds light on the iron and steel (IS) scrap trade to examine how economic development affects the quality demanded of recyclable resource. A simple model is presented that show a mechanism of how scrap quality impacts the direction of trade due to comparative advantage. We find that economic development in both importing and exporting countries has a positive effect on the quality of traded recyclables. Developed countries that intend to improve the domestic recovery of recyclables should raise the quality of separating recyclables while developing countries should tighten environmental regulations to help decrease the import of recyclables that cause pollution.

Keywords: iron and steel, scrap, environment, trade
JEL classification: F18, O13

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