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This paper examines the effect of trade barriers on quality levels in a duopolymodel for two countries where products are both vertically and horizontallydifferentiated. In the absence of quality regulation the producer in the largecountry produces a higher quality than the producer in the small country.Moreover, the quality levels between the two producers converge in case of marketintegration i.e. when the trade barrier is reduced. If a common minimum qualitystandard is introduced, which forces the low quality producer to increase thequality of his product, the high quality producer reacts strategically by loweringthe quality of his product. On unregulated markets, market integration increaseswelfare in both countries if they are almost of similar size. However, if thecountries are very asymmetrical with respect to size, market integration may harmwelfare in the large country. Introducing a minimum quality standard also hasambiguous effects on welfare. JEL classification: F12, F13, F14