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Abstract
The case of reduction in ad-valorem tariff as the trade liberalization policy is considered. It was
showed that it leads to higher quality of imports, ceteris paribus. This hypothesis was tested on
the case of Japanese beef imports from the United States and Australia. US beef, according to
the results of a Gallup’s survey, is considered by consumers in Japan the high-quality product
while Australian beef is considered the low-quality product. Empirical results support the
hypothesis. Moreover, the recent domination of the US beef in Japanese market is further
explained by increasingly more efficient US beef production relative to Australian production
and strong income effect where higher per capita income leads to more demand for higher
quality products.