why voluntary export restraints are voluntary the paper presents an analysis of the effect upon an oligopolistic equilibrium of introducing a voluntary export restraint ver upon an importing firm a ver set at the free trade level of imports is shown to raise the profits of all firms within the industry the result follows as the imposition of a ver upon a free trade nash price competition forces the domestic firm to become an industry price leader the ver raises industry prices by facilitating collusion and lowers consumer welfare pourquoi les restrictions volontaires d 1 exportation sont volontaires ce memoire presente une analyse des effets de l introduction de restrictions volontaires a l exportation rve sur une entreprise qui importe dans un monde en equilibre oligopolistique on montre que l introduction de rve approximant le niveau des importations en regime de libre echange devrait augmenter les profits de toutes les entreprises dans l industrie cela decoule du fait que l imposition de rve sur un univers de concurrence par les prix a la nash en regime de libre echange force l entreprise domestique a devenir le leader en prix l introduction de rve augmente le niveau des prix de l industrie en facilitant la collusion et de ce fait reduit le niveau de bien etre des consomrnateurs

what happened to fortress europe external trade policy liberalization in the european union in an era when many fear the breakdown of the global trading order through the emergence of relatively closed regional trading blocs assessing the effects of european integration on external european union trade is particularly important surprisingly despite a severe recession accompanied by record levels of unemployment a history of increasing protection under similar economic circumstances and alarming predictions about fortress europe external trade policy in the region has liberalized in recent years prominent trade policy explanations emphasizing changing interest group demands or changing ideas of policymakers are inadequate to account for this significant change in trade policy instead much of this liberalization can be best understood as an unforeseen consequence of the single european act completing the single market undermined the effectiveness of national trade measures and made it difficult to enact new trade barriers thus producing a liberal bias in european policy

optimal trade policy under oligopoly a calibrated model of the europe japan rivalry in the eec car market this paper was originally presented at the cefi conference on imperfect competition and international trade aix en provence france june 18 19 1987 we wish to thank avinash dixit who gave the initial impetus to this research we are also grateful to alexis jacquemin and paul krugman for valuable discussion and comments we thank also the french commissariat au plan for financial support and the chambre syndicale des constructeurs automobiles csca for gracious assistance

measuring global oil trade dependencies an application of the point wise mutual information method abstract oil trade is one of the most vital networks in the global economy in this paper we analyze the 1998 2012 oil trade networks using the point wise mutual information pmi method and determine the pairwise trade preferences and dependencies using examples of the usa s trade partners this research demonstrates the usefulness of the pmi method as an additional methodological tool to evaluate the outcomes from countries decisions to engage in preferred trading partners a positive pmi value indicates trade preference where trade is larger than would be expected for example in 2012 the usa imported 2 548 7 kbpd despite an expected 358 5 kbpd of oil from canada conversely a negative pmi value indicates trade dis preference where the amount of trade is smaller than what would be expected for example the 15 year average of annual pmi between saudi arabia and the u s a is 0 130 and between russia and the usa 1 596 we reflect the three primary reasons of discrepancies between actual and neutral model trade can be related to position price and politics the pmi can quantify the political success or failure of trade preferences and can more accurately account temporal variation of interdependencies

the economic development democratization relationship does the outside world matter the relationship between economic development and democratization offers a central focus in linking comparative and international politics analysts agree that economic development facilitates democratization but that the relationship is considerably less than perfect should advocates of the democratic peace argument prove to be correct in emphasizing the role of regime type in pacifying international politics an obvious question becomes what else drives democratization besides economic development in this article the authors explore the relationship between domestic development in the form of economic growth and democratization and international conditions they suggest that a number of international factors such as external threat conflict and trade openness can aid or abet democratization and economic growth to systematically analyze one facet of this proposition they use both robust regression and generalized estimating equations and find that the international environment significantly al

tariffs versus quotas with strategic investment the relative efficiency of tariffs versus quotas is analyzed in a cournot oligopoly with strategic investment introducing quota licence fees to neutralize the international distributional effect when such licence fees remove quota rents from foreign firms then for the case of constrained entry with a sufficiently large number of firms quotas frequently hold a welfare advantage since tariffs relatively aggravate the inefficiency from overinvestment in the case of free entry and exit however tariffs hold a welfare advantage since there is greater benefit of increasing returns to scale to the economy by avoidance of excessive entry of firms

trade policy subtleties with multinational firms abstract regional trade blocks must specify domestic content rules that define the conditions under which a good qualifies as domestic and so may be freely traded within the block this paper analyzes such rules focussing on oligopolistic industries in which foreign multinationals rely much more on imported intermediate inputs that do domestic firms in such a situation we argue that domestic content provisions are anti competitive reducing overall final output of the industry and shifting rents to domestic firms these ideas are examined analytically and then numerically using an applied general equilibrium model of the north american auto industry

competition transmission and pattern evolution a network analysis of global oil trade abstract this paper studies the competition among oil importers using complex network theory combined with several alternative measures of competition intensity to analyze the evolution of the pattern and transmission of oil trading competition the results indicate that oil trade has formed a global competition pattern and that the role played by the asian pacific region in the evolution of this competition pattern is becoming increasingly prominent in addition global competition intensity has continued to rise and non oecd countries have become the main driving force for this increase in global competition intensity the large oil importers are the most significant parts of the global oil trading competition pattern they are not only the major participants in the competition for oil resources but also play important roles in the transmission of oil trading competition china and the united states especially display the feature of globalization whose impacts of transmission reach across the whole oil trading competition network finally a 5c changeability contestability cooperation commitment and circumstances policy framework is put forward to maintain the stability of oil trade and improve the energy security of oil importers in various aspects

arming as a strategic investment in a cooperative equilibrium to develop a positive economic theory of military spending this analysis focuses on a game theoretic general equilibrium model of international conflict in which consumption peaceful investment and military spending are endogenously determined the analysis illustrates that when there is repeated interaction between nations a game of threats and punishments generally will not support a disarmament outcome and that fluctuations in military spending can be an endogenous result of fluctuations in aggregate economic activity furthermore the analysis shows how the relation between aggregate economic activity and military spending qualitatively depends on whether governments are acting opportunistically or cooperatively copyright 1990 by american economic association

the structure of third world economic interdependence empirical studies of interdependence have mainly focused on whether interdependence has been increasing or declining on a world scale in this research note i examine the nature of economic interdependence in the less developed countries ldcs the main question that i address is whether ldcs are more economically dependent in the sense of being more deeply involved in economic interdependence relationships than developed countries dcs richard cooper and edward morse have argued that economic interdependence is associated with increased industrialization and modernization implying that ldcs are less involved than dcs in interdependence relationships empirical evidence presented here suggests that ldcs are in fact more dependent than dcs

protectionist policies as the regulation of international industry the political feasibility of protectionist policies that regulate international industry derives from the absence of overt collusion among domestic import competing producers the regulation of international industry cannot be explicit since governments would thereby be perceived to be approving or instigating international collusion hence voluntary export restraints have been popularly presented with a focus on the difficulties confronted by domestic import competing producers and a de emphasis on the mutual gains to domestic and foreign producers from monitoring by a foreign government of a restrictive export cartel arrangement similarly trigger price mechanisms have popularly been explained in terms of the need for anti dumping measures to preserve fair competition likewise the involuntary export tax derived in the first instance from an administratively validated but as demonstrated by kalt s econometric analysis contentious complaint of unfair foreign competition voluntary export restraints trigger price mechanisms and involuntary export taxes are however protectionist devices the beneficiaries of which can transcend national jurisdictions and which have in common the characteristic that the gains to domestic industry interests derive from the regulation of foreign competitors

analysis of oil export dependency of mena countries drivers trends and prospects abstract the purpose of this paper is to analyse how oil export dependencies of middle east and north african mena oil producers have evolved over the past two decades and to identify the main driving factors from an energy policy perspective the paper expresses the oil export dependency of each economy in terms of a multiplicative identity that captures effective export price export to primary oil supply ratio oil dependency and oil export intensity of the country using the data for 1980 2006 the evolution in these factors is investigated for seven mena countries and the influence of the above factors is decomposed using the laspeyres index the analysis shows that energy price and increasing energy intensity in the mena countries have influenced the overall oil export dependency reducing the energy intensity can improve oil export revenue share to gdp by 5 10 in most of the countries while iran can gain significantly by increasing its export volume

trade restrictions as facilitating practices abstract the effect of quantitative restrictions in oligopolistic markets is shown to depend on whether imports are substitutes or complements for domestic products in the former case they have profound effects even when set at free trade levels because they impede the ability of the foreign firm to compete in the domestic market thereby acting to facilitate collusion and raise prices and profits for this reason tariffs and quotas are fundamentally non equivalent with substitute goods when goods are complements a voluntary export restriction ver at the free trade level has no effect and tariffs and quotas are equivalent

politics the state and basic human needs a cross national study this study examines ways that political processes influence the provision of basic human needs once the effects of aggregate national wealth are removed three general explanatory approaches are examined these are based on the size or strength of the national government the achievement ofdemocratic processes and the ideological orientation ofruling elites along a left right dimension these three approaches are analyzed by regressing an index of physical well being the pqli on measures drawn from each perspective for a sample of 1 16 contemporary nations the findings indicate that political attributes do indeed have an impact on the provision of basic needs even when controlling for aggregate social wealth democratic processes are related to positive welfare outcomes irrespective of state strength and ideological norms for regimes with a roughly centrist ideology state strength appears to make little noticeable difference one way or another for those on the left state strength promotes welfare performance for those on the right state strength is found to inhibit the provision of basic needs how do political processes affect the welfare of individuals this question in countless variants has motivated students of political economy at least since the advent of the modern nation state in its simplest form the empirical question becomes what kind of state achieves the highest level of welfare for its citizens although it may seem that there are as many answers as possible dimensions of states most analyses have centered on one or more of three general explanatory approaches the first focuses on the size or strength of the state apparatus as the essential ingredient in translating productive potential into welfare outcomes successful welfare performance hinges on the capability of the state because the state is considered the one social institution concerned with the material needs of the population as a whole a second model highlights procedural aspects of the political system rather than the budgetary strength of the state by linking successful welfare outcomes to the relatively even distribution of political power brought about by political democracy the third approach is distinguished from the other two by its emphasis on the ideological orientation usually on a left right continuum of ruling elites this model posits welfare

economic dependence and political democracy a cross national study this study critically examines the widely held hypothesis that a simple inverse relationship exists between economic dependence and political democracy a recent study presenting empirical evidence in support of this simple hypothesis is first criticized on methodological grounds a reanalysis of the author s data which takes these criticisms into account fails to confirm the author s original findings the simple hypothesis is then retested using other measures of economic dependence and democracy these analyses also fail to confirm the simple hypothesis finally an alternative theoretical framework for viewing the relationship between economic dependence and political democracy is developed based on the work of o donnell cordoso skidmore and kaufman although this framework is not empirically tested here it serves to highlight the weak theoretical foundation that underlies the simple hypothesis

self interest and national security the inner mechanism of global competition remains much as adam smith defined it two centuries ago nations interact while seeking to win by gaining higher wealth self interest in gaining wealth drives the process although wars and other deviations often occur in this setting economic concepts of competition benefit cost criteria and risk can help in defining efficient choices among policy tools including military activities from research using those concepts my study with theodora shepherd 1986 1 will discuss several tentative conclusions about the u s ussr rivalry 1 the global competitive process let us call it process 1 has properties which appear to make it stable 2 the united states and ussr appear to possess inherent security from conquest by each other 3 each country s efficient limit on military spending can be analyzed as an analog of payments for insurance to raise national security in that context inherent security reduces the u s and ussr s efficient levels of armaments 4 military entropy occurs global wealth is subject to a general process process 2 which subtracts it into military forms and warfare

voluntary export restraints as protection policy the u s beef case there are several well known implications of international trade theory which are relevant to our study with a tariff an importing country s welfare can improve only if the excess supply curve is upward sloping under the large country assumption bhagwati has shown that a quota used by an importer can be equivalent to a tariff and mintz has contrasted features of tariffs quotas and vers empirical work has focused largely on the effects of tariffs and equivalent quotas generally exporting countries lose from such trade barriers in contrast we find that exporting countries gain and importing countries lose with a ver we also contrast the gains and losses of vers in the case of frozen boneless beef to an optimal tariff and optimal export tax the theoretical implications of vers for beef exporters were first recognized by freebairn and gruen

the closed loop motive for voluntary export restraints this paper examines the effects of voluntary export restraints in a dynamic game model of duopolistic competition it is shown that the imposition of a voluntary export restraint at the free trade level of imports increases the market price and the profits of all firms in the industry if free trade is identified as the closed loop subgame perfect cournot equilibrium of the game hence the authors conclude that the predictions of static cournot competition do not carry over to the dynamic case

the macroeconomics of dr strangelove the cold war has ended and president george bush has declared the beginning of a 4 new world order this new world order has so far been characterized by the intensification of regional disputes civil strife and civil war its implications for arms proliferation and arms control are still unclear this paper considers both superpower conflict and the transition to international cooperation in the context of a model that emphasizes intergenerational linkages specifically we explore the weapons accumulation decisions of two adversarial countries in the context of a deterrence conflict initiation game embedded in an overlapping generations model the demographic structure of the overlapping generations model allows the analysis of both between and withincountry intergenerational external effects caused by past weapons accumulation decisions while the two country setting permits consideration of international external effects caused by the adversary country s current weapons accumulation decision we analyze the noncooperative equilibrium and then consider the effects of a regime change characterized by international cooperation but where the intergenerational externali

vertical mergers and market foreclosure ythe model in this paper illustrates three effects of vertical mergers when both stages are oligopolistic and vertically integrated and unintegrated producers coexist first the merging firm increases its final good output second the resulting backward shift in the residual demand curve facing unintegrated final good producers ylowers their demand for the intermediate good third the merged firm withdraws from the intermediate good market the increased concentration pushes the intermediate good price upward which effect dominates depends on market structure under some conditions a vertical merger causes the price of the final good to increase

quantity restrictions and endogenous quality choice abstract in a vertical product differentiation model under cournot competition both foreign and domestic firms respond by lowering their investment in long run quality for a quantity restriction at and in the neighborhood of the free trade import level average quality increases only when the low quality foreign firm faces a substantially restrictive quota voluntary export restraint the change in quality depends on whether the foreign firm is of high or low quality and upon the restrictiveness of the quota the imposition of quantity restrictions has important strategic effects on the long run choice of quality

quantifying the sustainability of economic resource networks an ecological information based approach abstract sustainability as a concept has multiple disparate perspectives stemming from different related disciplines which either maintain ambiguous interpretations or concentrate on metrics pertaining to single aspects of a system given the embedded multi dimensionality of sustainability systemic approaches are needed that can cope with interactions of different dimensions past efforts for measuring sustainability holistically have taken an accounting approach based on the availability and efficiency of resource flows however an accounting approach fails to fully incorporate the intensive parameters pertaining to sustainability an ecological information based approach is a promising holistic measurement which incorporates both intensive and extensive dimensions of sustainability this paper evaluates this approach by applying it to six economic resource trade flow networks virtual water oil world commodity oecd bric commodity oecd bric foreign direct investment and iron and steel from the perspective of biomimicry it appears that these networks can achieve higher levels of efficiency without weakening their robustness to resource delivery the trends of measured efficiency and redundancy of the studied networks are demonstrated to be useful in reflecting long term changes while the trend in robustness levels were found to exhibit similar behavior to an ecosystem in its early phase of development

an economic theory of vertical restraints vertical restraints imposed by manufacturers on the prices locations and sales of retail firms represent a puzzling departure from the simple price mediated exchange of conventional markets in this article we analyze the theoretical basis for these restraints in a setting where retailers inform consumers and are imperfectly competitive and where a manufacturer has some monopoly power we identify three potential externalities affecting retailers decisions these externalities lead to the failure of simple uniform price contracts to coordinate the incentives of retailers with the objective of maximizing combined manufacturer and retailer profits we identify the packages of vertical restraints that are minimally sufficient under various conditions to neutralize the externalities and to achieve the joint profit maximum

more on the non equivalence of voluntary export restraints abstract this note demonstrates that vers limiting exporters to a percentage of the domestic market are not equivalent to other trade restrictions and that they can be inferior to equivalent import quotas even when the quota rents accrue to foreign exporters

tariffs quotas and voluntary export restraints with and without internationally mobile capital this paper presents a general framework for comparing the effects of tariffs quotas and vers voluntary export restraints both with and without international capital mobility expressions for the shadow price of foreign exchange and the shadow price of capital under each type of trade restriction are derived and it is shown that although international capital mobility raises the welfare cost of tariff protection it lowers the welfare cost of quantitative restrictions in most cases the effects of exogenous shocks in the presence of quotas are intermediate between those in the presence of tariffs and those in the presence of vers tarifs douaniers contingentements et restrictions volontaires d l exportation quand le capital est ou n est pas mobile internationalement l auteur presente un cadre general d analyse qu il utilise pour comparer les effets de tarifs douaniers de contingentements et de restrictions volontaires a l exportation dans des contextes ofu le capital est ou n est pas mobile internationalement l auteur derive le prix fictif du change etranger et le prix fictif du capital sous l un et l autre types de restrictions au commerce et montre que meme si la mobilite internationale du capital augmente le cofut en terme de bien etre de la protection tarifaire elle reduit le cofut en terme de bien etre des restrictions sur les quantites echangees dans tous les cas les effets de chocs exogenes quand des contingentements existent sont toujours dans la fourchette entre ceux qu on observe quand des tarifs douaniers existent et ceux qui prevalent quand des restrictions volontaires i l exportation existent

price quality and welfare effects of european vers on japanese autos abstract this paper examines the impact of the vers negotiated by the u k france and germany with japanese car makers market share analysis shows that the vers did not arrest the declines in apparent consumption by local producers further analysis from a sample of japanese and other cars sold on the french and german markets indicates quality upgrading between 1981 and 1983 the data also suggest that the ver was strictly binding in france starting around 1984 but not in germany until 1985 the end of the sample period finally the paper shows that the french german and japanese car producers supplied an increasingly similar product mix on the french market throughout the sample period 1979 1985 but the italian producers shifted towards a lower fiscal horsepower mix

the democratic peace and a sequential reciprocal causal arrow hypothesis one of the democratic peace puzzles is the question of whether and to what extent the democracy peace relationship underestimates the possibility that peace precedes democracy the reversed causal arrow hypothesis from a war making state making perspective democratization needs to be viewed as a partial function of external threat and domestic power concentration all three variables are found to be interrelated as predicted and related in turn to the external conflict behavior of major powers from 1816 to 1992 these monadic findings however do not appear to negate the dyadic relationship between democratization and selectively reduced conflict behavior in sum there is substantial support for the reversed causal arrow hypothesis but it does not render the regime type conflict behavior relationships spurious rather it enriches the understanding of the context in which democratization has emerged to have some effect on international politics

international r d rivalry and industrial strategy this paper presents a theory of government intervention which provides an explanation for industrial strategy policies such as r d or export subsidies in imperfectly competitive international markets domestic net welfare is improved by the capture of a greater share of the output of rent earning industries although the subsidy ridden noncooperative international equilibrium is jointly suboptimal behaviour of governments and firms is modelled as a three stage subgame perfect nash equilibrium the assumption that the government is the first player in this game allows it to influence equilibrium outcomes by altering the set of credible actions open to firms