collusion collective action and protection theory and evidence this paper provides a novel explanation forthe formation of protectionist lobby groupsin imperfectly competitive sectors thelevel of collusion is shown to be a crucialdeterminant of the ability of firms tosustain lobbying we show that greatercollusion reduces firm contributionsto tariff lobbying when the governmentvalues welfare sufficiently and thecross price elasticity between the domesticand foreign goods is sufficiently high the empirical evidence from the u s supports the theory greater collusionreduces the level of pac contributions

are estimates of earnings inequality sensitive to measurement choices a case study of canada in the 1980s while it is necessary that researchers make choices in order to estimate inequality the reasons for the measurement choices and their impact on inequality estimates have not been widely assessed this paper uses canadian data from the 1980s to analyse whether inequality estimates are sensitive to common measurement choices seemingly minor technical choices about the treatment of outlying observations such as the use of top income coded data exclusion of very high and low observations and differences among data sets in the capture of very high observations affect estimates of inequality further the impact of the treatment of outlying observations on inequality estimates are at least as large as the impact of measurement choices of a conceptual nature such as the income definition and population selection the sensitivity of inequality estimates to measurement choices which often remain invisible affect inferences about the relative degree of inequality at a given point in time among countries and

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

technology adoption government policy and tariffication abstract we integrate trade policy into an open economy model of technology adoption to investigate the impact of alternate trade barriers on the equilibrium diffusion of a cost saving technology it is shown that even when ad valorem tariffs have a neutral impact on technology adoption non tariff barriers such as quotas can be used to affect the speed of technology diffusion in both the home and foreign countries in addition we demonstrate how in an open economy setting tariffication i e the conversion of quotas to ad valorem tariffs can lead to faster technology adoption world wide

policies and international trade agreements on technical compatibility for industries with network externalities abstract the paper considers a country home in which consumers have heterogeneous preferences over ex ante incompatible domestic and imported products and benefit from a network externality we analyze the cases with trade under perfect competition and the international duopoly in which both governments strategically use policies toward compatibility but cannot use conventional trade policies in both cases the equilibrium outcome of the non cooperative game depends upon the strength of the network externality effect and involves either an excessively high equilibrium level of compatibility in combination with either too much or too little trade or very low equilibrium levels of both compatibility and trade the paper concludes with the analysis of the international agreements on policies toward compatibility and evaluates the existing provisions in the wto legal system aimed at minimizing the trade inhibiting impact of standards and regulations in the area of technical compatibility

evaluating the impact of rising fertilizer prices on crop yields because of tensions on fossil energy and phosphorus markets the rise in fertilizer prices observed during the last decades may continue in the future putting into question production pathways relying heavily on crop intensification to evaluate how in this context economic choices may alter crop yields we first construct different fertilizer price scenarios to 2050 based on an econometric relation with oil and gas prices other possible scenarios such as the continuation of historical trends are also considered the resulting changes in fertilizer price range between 0 8 and 3 6 per year over the 2005 2050 period these scenarios are tested in a global land use model incorporating an endogenous representation of the land fertilizer substitution we find that the supply side response to rising fertilizer prices could lower crop yields in 2050 from 6 to 13 with a corresponding increase in global cropland area ranging between 100 and 240 mha if the demand for food and nonfood products has to be met the sensitivity of these results is tested with regard to assumptions on food consumption change in potential yield and nutrient use efficiency resume d auteur

testing the theory of trade policy evidence from the abrupt end of the multifiber arrangement abstract quota restrictions on united states imports of apparel and textiles under the multifiber arrangement mfa ended abruptly in january 2005 this change in policy was large predetermined and fully anticipated making it an ideal natural experiment for testing the theory of trade policy prices of quota constrained categories from china fell by 38 in 2005 with smaller declines from other exporters prices in unconstrained categories from all countries changed little we also find substantial quality downgrading in imports from china in previously constrained categories the annual cost of the mfato u s consumers was 63 per household

voluntary export restraints and expectations an analysis of export quotas in oligopolistic markets the frequency of export quotas imposed as voluntary export restraints has been increasing this tends to create the expectation that similar export quotas will be imposed in the future even if free trade is allowed now the author analyzes the effect of such an expectation he demonstrates that if a quota is expected to be imposed on foreign exporting firms it intensifies the exporting firms competition in the prequota period this offsets the protection which the export quota as a voluntary export restraint will provide for domestic import competing firms in the future quota period copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

simulating changes in conjectural variations tariff and quota nonequivalence in food processing increasingly agricultural economists have argued that domestic and international agricultural and processed food markets are at least to some degree imperfectly competitive while early work in this area simply imposed behavioral and structural forms on the international market under study mccalla and alaouze watson and sturgess recent efforts have been to identify the appropriateness of these assumptions by explicitly testing for imperfectly competitive behavior relevant work includes that of karp and perloff and love and murniningtyas similarly a number of studies have tested for market power in domestic food markets see perloff for a useful summary lagging behind these recent developments has been the incorporation of imperfect competition into the modeling of agricultural trade policy reforms for example much of the work that has dominated assessment of the gatt uruguay round reforms tyers and anderson typically assumes perfectly competitive behavior in the food and agricultural sector despite increasing evidence to the contrary recently however noncompetitive behavior in food processing has been incorporated into computable general equilibrium modeling of the effects of agricultural trade policy reform hertel clearly further work in modelling policy outcomes in noncompetitive markets is important we focus on a particular aspect of this agenda how to handle empirically the effect of nontariff barriers ntbs in oligopolistic markets importance of ntbs in trade policy analysis

recent trends in the uk income distribution what happened and why the uk income distribution changed its shape dramatically during the 1980s this paper documents the trends and analyses their causes copyright 1996 by oxford university press

content protection and oligopolistic interactions in oligopolistic situations content protection can have unexpected effects as it changes the nature of interactions between input suppliers with a duopoly it does so in a manner that makes the foreign firm wish to match price increases and decreases of the domestic firm domestic input suppliers can therefore lose from such policies even when set at free trade levels the relation between input demands the form of protection and the degree of substitution between inputs is shown to define the effects of content protection and to provide the basis for understanding who might lobby for protection in different environments

market share quotas abstract anecdotal evidence reveals that an import quota is not always filled when the quota is specified in terms of a market share limit instead of a quantity limit in a simple cournot duopoly we show that imposing a market share quota eliminates pure strategy equilibria instead a mixed strategy equilibrium occurs where the quota is not binding under one of the two equilibrium domestic strategies compared with a tariff that restrains the foreign market share to an equivalent level domestic output and social welfare may be higher under a market share quota

global land use implications of first and second generation biofuel targets recently an active debate has emerged around greenhouse gas emissions due to indirect land use change iluc of expanding agricultural areas dedicated to biofuel production in this paper we provide a detailed analysis of the iluc effect and further address the issues of deforestation irrigation water use and crop price increases due to expanding biofuel acreage we use globiom an economic partial equilibrium model of the global forest agriculture and biomass sectors with a bottom up representation of agricultural and forestry management practices the results indicate that second generation biofuel production fed by wood from sustainably managed existing forests would lead to a negative iluc factor meaning that overall emissions are 27 lower compared to the no biofuel scenario by 2030 the iluc factor of first generation biofuels global expansion is generally positive requiring some 25 years to be paid back by the ghg savings from the substitution of biofuels for conventional fuels second generation biofuels perform better also with respect to the other investigated criteria on the condition that they are not sourced from dedicated plantations directly competing for agricultural land if so then efficient first generation systems are preferable since no clear technology champion for all situations exists we would recommend targeting policy instruments directly at the positive and negative effects of biofuel production rather than at the production itself

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

endogenous trade policy under foreign direct investment abstract using bernheim and whinston 1986 common agency game we endogenize trade policy in a duopoly composed of a domestic firm and a foreign firm where both firms influence the domestic government s trade policy via their contributions the foreign firm can jump over trade restrictions by undertaking foreign direct investment fdi in the domestic market the government prefers a voluntary export restraint ver to a tariff for two reasons first a ver leads to higher contributions from the foreign firm than a tariff second a ver provides a higher level of protection to the domestic firm without generating fdi by the foreign firm

strategic non intervention and the choice of trade policy for international oligopoly abstract this paper analyzes a game of strategic trade policy between governments who may choose among quantity controls subsidies and non intervention as policy instruments central to the analysis is our view of non intervention as a distinct policy choice we derive conditions under which non intervention is strictly preferred to the alternative instruments preferences between non intervention and the nash equilibrium subsidy confirm to a simple distance measure involving the stackelberg leadership subsidy the subsidy level zero or nash that is closest to the stackelberg subsidy being preferred

liberalization quality and welfare removing the italian ver on japanese car exports the empirical evidence that evaluates ex post the effects of trade policy confirms the presumption well known in theory that quantitative barriers to trade have an impact on the average quality of exports yet in evaluating ex ante the effects of trade policy reform very few studies take into account the role of the induced change in quality the paper evaluates the effects of liberalization in the italian car market through a calibrated model where the choice of the quality of exports is made endogenous simulating the removal of the ver on japanese exports there are substantial gains from liberalization when only quantity effects are considered results change dramatically if quality effects are taken into account the downgrading in japanese exports entails a strong reduction in consumers gains

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

endogenous probability of protection and firm behavior abstract this paper studies the strategic reactions of firms to protectionist policies that are enforced with endogenous probability this probability is a function of firms actions firms in the country that may adopt the protectionist measures try to increase the probability of sanctions while foreign firms try to reduce this probability a simple framework is used to derive general results for uncertain protection this framework is used to analyze the responses to specific protectionist policies such as antidumping legislation and restrictions on the import market share finally the paper studies the welfare implications of the model

foreign lobbies and us trade policy abstract in popular discussion much has been made of the susceptibility of government policies to lobbying by foreigners the general presumption being that this is harmful to the home economy however in a trade policy context this may not be the case if the policy outcome absent any foreign lobbying is characterized by welfare reducing trade barriers foreign lobbying may reduce such barriers and possibly raise welfare using a new data set on foreign political activity in the united states this paper investigates this question empirically tariffs and nontariff barriers are both found to be negatively related with foreign lobbying activity

urban rural income polarization and economic growth in china evidence from the analysis of a dynamic panel data model using a dynamic panel data model and the system gmm this article examines the relationship between urban rural income polarization and economic growth at the provincial level in the period 1995 to 2010 in china the estimated results and significant tests indicate that a certain degree of urban rural income polarization is beneficial to economic growth at the provincial level in both stages for china as a whole though the contribution of urban rural income polarization to economic growth is relatively small aggravating urban rural income polarization has a negative impact on economic growth in china based on a cluster analysis of regional economic growth at the provincial level the authors carried out the same analysis separately for two categories of regions too the results for those two categories of regions show that positive correlations also exist between urban rural income polarization and economic growth in both stages which are very similar to the analysis for the whole of china in additio

tariffs quotas and terms of trade the case of new zealand abstract this paper reports quantitative information on the effects of tariffs and quotas on prices of individual goods the analyses uses the natural experiment provided by a comprehensive unilateral trade policy reform in new zealand to examine the response of foreign exporters to an incident of liberalisation that is unique in the developed world the price effects of tariffs and quotas are estimated using a multidestination 7 digit longitudinal product level dataset on export values and quantities the effects are found to be by no means equivalent whereas tariffs display no significant effect the impact that quantitative restrictions have on the terms of trade of the country that imposes them are unequivocally detrimental and quantitatively important

assisting domestic industries under international oligopoly the relevance of the nature of competition to optimal policies optimal trade and industrial policies are derived for a home market that is supplied by a domestic firm and a foreign firm the optimal policy combination can be quite sensitive to the nature of the duopoly s competition for example for some cost and demand s tructures the optimal policy under cournot competition consists of a domestic production tax and a tariff but that under bertrand compet ition consists of a production subsidy and free trade copyright 1988 by american economic association

income distribution human capital and economic growth in colombia abstract colombian income distribution has followed a clear path during the last two decades in the second half of the 1970s human capital accumulation reduced the dispersion of income distribution and lead to a period of stagnation between 1983 and 1990 when mobility declined after the structural reforms a skill bias technological change the wage differential for skilled workers increased inequality by a polarization in the bi modal distribution of income these topics are discussed in the paper along some dynamic aspects of income and educational mobility in colombia

voluntary export restraints on automobiles evaluating a trade policy the authors evaluate the voluntary export restraint that was initially placed on exports of automobiles from japan in 1981 they evaluate the impact this policy had on u s consumer welfare firm profits and foregone tariff revenue from its initiation through 1990

trade policy and product variety when is a ver superior to a tariff using the romer romer p 1994 new goods old theory and the welfare costs of trade restrictions j dev econ 43 5 38 model of trade policy and product variety this note shows that a voluntary export restraint ver may be superior to an equivalent tariff that results in the same volume of total imports the explanation for this counterintuitive result is that the ver has less effect on the profitability of foreign firms than the tariff and hence the reduction in product variety with the ver is less than with the tariff if the greater product variety with the ver is sufficiently large to compensate for the loss of tariff revenue then the ver is superior to the equivalent tariff

price undertakings vers and foreign direct investment the case of foreign rivalry antidumping ad petitions are often withdrawn in favour of voluntary export restraints vers and price undertakings this paper compares these policy options in the presence of protection jumping foreign direct investment fdi with special emphasis on rivalry between foreign firms we show that a ver is less likely to induce fdi than a price undertaking or ad as a result by settling ad cases with ver agreements the importing country can pursue a more protectionist policy without triggering fdi in this sense the gatt ban on vers following the proliferation of ad uses was a sensible decision les plaintes anti dumping ad sont souvent retirees quand le pays etranger propose des avp ou des rve ce memoire compare l impact de ces differentes possibilites sur l incitation des firmes etrangeres a s engager dans l ide avec une attention particuliere a la rivalite des firmes etrangeres on montre que les rve sont moins susceptibles d entrainer l ide que les avp ou l action ad en consequence en resolvant les plaintes ad a l aide de rve le pays importateur peut poursuivre une politique davantage protectionniste sans declencher les ide en ce sens la prohibition des rve par le gatt suite a la proliferation des plaintes ad etait une decision defendable

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

the max min group contest weakest link group all pay auction we investigate a group all pay auction in which each group s effort is represented by the minimum among the effort levels exerted by the group members and the prize is a group specific public good we fully characterize the symmetric equilibria for two groups there are four types of equilibria the pure strategy equilibria in which all active players exert the same effort the semi pure strategy equilibria in which the players in a group play the same pure strategy whereas those in the other group play the same mixed strategy the nondegenerate mixed strategy equilibria with continuous support and the nondegenerate mixed strategy equilibria with discontinuous support we then analyze a general contest with n groups

on pareto improving voluntary export restraints abstract this paper develops the argument that binding voluntary export restraints vers may raise the profits of all firms and the welfare of all trading partners this possibility is shown to arise in a model of cournot oligopoly and is consistent with the theory of the second best vers benefit unconstrained firms if the favorable effect due to the increase in domestic import price outweighs the adverse effect due to a loss in market share then vers will also benefit constrained firms vers will improve the importing country s welfare if they raise the profits of domestic firms more than they reduce domestic consumer surplus the paper synthesizes these findings and derives conditions for vers to be pareto improving

tariffs quotas and market structure this paper examines the effects of tariffs and quotas on the pricing pattern of producers in the case of duopoly by a domestic monopolist and a foreign monopolist it is pointed out that tariffs and quotas may induce completely different pricing patterns in the two producers under a quota it is always profitable for the home producer to be a price leader and for the foreign producer to be a follower whereas under a tariff either producer may become a leader it is also proved that whatever leader follower relation is chosen under a tariff a quota always bring about a higher domestic price than the tariff as long as both permit the same amount of imports

domestic politics foreign interests and international trade policy reply this paper incorporates the foreign interest in the determination of a country s international trade policy into a model of political competition between candidates contesting elective office we envisage foreign and domestic producer interests as expressing political support for a candidate via campaign contributions and candidates as making trade policy pronouncements to maximize political support from producer interests tariffs are divisive but vers are consistent with conciliatory policy positions yielding mutual gain to foreign and domestic interests no candidate has an interest in formulating a trade policy position using a tariff if a ver is a policy option protection in the developed countries has in recent years often taken the form of bilaterally negotiated voluntary export restraints vers rather than the more traditional unilaterally imposed import restrictions the use of voluntary export restraints has been paralleled by interest in the theoretical literature the effects of vers have been compared with tariffs and quotas and vers have been examined in a political economy framework with a view to identifying the gainers and losers from this form of restric

quantitative restrictions and tariffs with endogenous firm behavior abstract this paper considers a foreign oligopoly which dominates an importing country s market with its exports of differentiated products it constructs a model where firm behavior is endogenously determined in an infinitely repeated game and it analyzes the impact of trade policies on market conduct and welfare optimal tariffs optimal quotas and optimal tariff quotas are characterized and compared one result is that quotas can enhance competition and increase welfare another result is that quotas can be superior to tariffs finally optimal tariff quotas are welfare superior to either tariffs or quotas alone

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

nitrogen land substitution in corn production a reconciliation of aggregate and firm level evidence in this paper we seek to reconcile low farm level substitution elasticity between nitrogen fertilizer and land with larger industry level values for the corn sector this is accomplished with a micro simulation model which identifies twenty three heterogeneous groups of corn farmers based on survey data for indiana after controlling for soil quality slope crop rotation and natural nitrogen sources considerable variation in fertilizer application rates remains model simulations indicate that the estimated substitution elasticity at the state level 1 15 is consistent with very low farm level substitutability the difference is attributable to compositional changes in the wake of relative price shocks these compositional effects are potentially very important but they are ignored in most policy analyses

cartel stability and tariff policy abstract in this paper we investigate the effect that tariff policy has on the ability of firms to collude in oligopolistic industries we find that small tariff rates lead to an industry structure more conducive to collusive behavior while large tariff rates weaken cartels there exists a critical tariff rate which has no effect on the cartel s stability this critical value is found to be a decreasing function of n the number of firms in the industry and n d n the proportion of firms that are domestic

trade quotas and buyer power with an application to the e u natural gas market we consider a market in which domestic buyers negotiate contracts with foreign sellers and explore how trade quotas can help to increase the buyers countervailing power we use the shapley value to describe bargaining power and the distribution of the trade surplus in such a bilateral oligopoly by exploiting strategic externalities among the buyers bilateral trade quotas can improve the buyers bargaining positions in contrast aggregate trade restrictions on all buyers trade never improve buyer surplus minimum quotas on imports from fringe suppliers can benefit nonaffected buyers as these enjoy positive externalities we apply these insights to the e u market for natural gas and show that the effects of trade quotas on e u gas importers power can be significant

testing the significance of income distribution changes over the 1980s business cycle a cross national comparison using kernel density estimation we describe the distribution of household size adjusted real income and how it changed over the business cycle of the 1980s in the united states and the united kingdom we confirm previous studies that show income inequality increased in the two countries and the middle of the distribution was squashed down using a series of statistical tests however we find that while the mass in both tails of the distribution increased significantly in both countries over the period by far the greatest gains were in the upper tail copyright 1999 john wiley sons ltd

estimating intertemporal supply response in the fed beef market a partial adjustment model with monthly lag structures on expected output and input prices is used to estimate intertemporal supply behavior of fed beef previous research has provided conflicting supply elasticities the present work reconciles the conflicts by integrating different lengths of run into cattle marketing and placement decisions for example the model dynamics incorporate short run changes in cattle asset values and long run adjustments in resource use empirical results provide no evidence of short run supply fixity supply elasticities switch from negative to positive over time

strategic second sourcing by multinationals multinationals often serve foreign markets by exporting as well as by investing directly in foreign production facilities we argue that if the multinational competes in an oligopolistic market characterized by strategic complements then there are strategic reasons to use two production facilities committing to a second source allows the firm to keep average cost low while increasing its marginal cost the increase in marginal cost softens product market competition resulting in higher profits we argue that this theory also has implications for the make or buy literature in production management and the literature on second sourcing in industrial organization

does income polarization affect economic growth the case of the european regions ezcurra r does income polarization affect economic growth the case of the european regions regional studies this paper examines the relationship between income polarization and economic growth in the regions of the european union over the period 1993 2003 the results indicate that the level of income polarization is negatively associated with regional growth this finding is in fact robust to various alternative specifications including a number of additional explanatory variables such as initial per capita gross domestic product industry mix human capital stock population density or market potential furthermore it should be noted that the observed negative correlation between polarization and economic performance does not depend on the number of groups used to analyse the degree of income stratification within the sample regions ezcurra r la polarisation des revenus affecte t elle la croissance economique le cas des regions europeennes regional studies cet article etudie les relations en

ec members fighting about surplus vers fdi and japanese cars the distribution of consumer and producer surplus among ec members of three different trade regimes free trade a voluntary export restraint ver and a ver in conjunction with foreign direct inv

price competition between an expert and a non expert abstract this paper characterizes price competition between an expert and a non expert in contrast with the expert the non expert s repair technology is not always successful consumers visit the expert after experiencing an unsuccessful match at the non expert this re entry affects the behavior of both sellers for low enough probability of successful repair at the non expert all consumers first visit the non expert and a timid pricing equilibrium results if the non expert s repair technology performs well enough it pays for some consumers to disregard the non expert a visit they directly go to the expert s shop and an aggressive pricing equilibrium pops up for intermediate values of the non expert s successful repair a mixed pricing equilibrium emerges where the expert randomizes over the monopoly price and some lower price

the non equivalence of tariffs and quantity restraints as rent shifting policies in a differentiated oligopoly with quantity as the strategic variable an optimal tariff can lead to a welfare gain when a quantity restraint is used instead this gain can be offset since the quota induces anticompetitive effects however alternative quantity restraints such as import quotas or voluntary export restraints whether specified in volume or ratio form will influence the strength of the anticompetitive effect in this paper the authors evaluate empirically the degree of nonequivalence between alternative trade instruments and the factors that likely influence it

research and development voluntary export restriction and tariffs abstract the effect of trade policy on domestic research development r d in oligopolistic markets is shown to depend on the nature of policy instruments tariffs or non tariff barriers when the r d investment has uncertain consequences on marginal cost a voluntary export restriction ver decreases innovation by the domestic firm as compared to the free trade level this result holds both under cournot and bertrand competition a tariff increases r d investment it is a new rationale for southern firms to prefer ver as a policy instrument besides the well known argument that it facilitates collusion

anatomy of a crisis the causes and consequences of surging food prices although the potential causes and consequences of recent rising international food prices have attracted widespread attention many existing appraisals are superficial and or piecemeal this article attempts to provide a more comprehensive review of these issues based on the best and most recent research as well as on fresh theoretical and empirical analysis we first analyze the causes of the current crisis by considering how well standard explanations hold up against relevant economic theory and important stylized facts some explanations turn out to hold up much better than others especially rising oil prices the depreciation of the u s dollar biofuels demand and some commodity specific explanations we then provide an appraisal of the likely macro and microeconomic impacts of the crisis on developing countries we observe a large gap between macro and micro factors which when identifying the most vulnerable countries often point in different directions we conclude with a brief discussion of what ought to be learned from this crisis

the evolution of price dispersion in the european car market car prices in europe are characterized by large and persistent differences across countries the purpose of this paper is to document and explain this price dispersion using a panel data set extending from 1980 to 1993 we first demonstrate two main facts concerning car prices in europe i the existence of significant differences in quality adjusted prices across countries with italy and the u k systematically representing the most expensive markets 2 substantial year to year volatility that is to a large extent accounted for by exchange rate fluctuations and the incomplete response of local currency prices to these fluctuations these facts are analysed within the framework of a multiproduct oligopoly model with product differentiation the model identifies three potential sources for the international price differences price elasticities generating differences in markups costs and import quota constraints local currency price stability can be attributed either to the presence of a local component in marginal costs or to markup adjustment that is correlated with exchange rate volatility the latter requires that the perceived elasticity of demand is increasing in price we find that the primary reason for the higher prices in italy is the existence of a strong bias for domestic brancs that generates high markups for the domestic firm fiat in the u k higher prices are mainly attributed to better equipped cars and or differences in the dealer discount practices the import quota constraints are found to have a significant impact on japanese car prices in italy france and the u k with respect to local currency price stability a large percentage of the documented price inertia can be attributed to local costs and a smaller fraction to markup adjustment that is indicative of price discrimination based on these results we conjecture that the emu will substantially reduce the year to year volatility observed in the car price data but without further measures to increase european integration it will not completely eliminate existing cross country price differences

keiretsu and relationship specific investment implications for market opening trade policy abstract this paper considers the implications of relationship specific investment within keiretsu for policies aimed at opening the japanese market for intermediate goods such as auto parts both vies applied to parts and vers restricting japanese exports of autos cause the keiretsu to import a wider range of parts but of a relatively unimportant type such as seat covers since keiretsu investment and output fall the total value of us parts exports may actually fall for a given value of these exports a vie is less costly for us consumers and japanese producers but a ver is preferred by us automakers

tariffs vs quotas under duopoly of heterogeneous goods abstract this paper analyzes a model of duopoly with heterogeneous goods where behavior patterns are endogenously determined by producers it is shown that the source of non equivalence of tariffs and quotas is not the monopolistic behavior of the domestic producer over consumers but a certain kind of his behavior against the foreign producers this result is then extended to the cases of a general nash type oligopoly and monopolistic competition the paper also examines how the behavior patterns of the producers are affected by tariffs and quotas and proves non equivalence of tariffs and quotas in the duopoly situation where the pricing behavior of the producers is endogenously determined by trade policies

an econometric analysis of price differentials in the eec automobile market the paper investigates the sources of the observed price disparities in the eec automobile market on the basis of an oligopoly model with product differentiation this paper tests and fails to reject the hypothesis that automobile firms segregate national markets in the eec it is found that value added tax differentials and the existence of different import restraints quotas and vers are important contributing factors to price disparities on the contrary transportation cost differentials are not a significant explanatory variable finally the preference for domestic products or national brands is found as an important contributing factor in britain and itlay

the ambiguous consequences of anti dumping laws the anti dumping law is most often applied in oligopolistic industries while most analyses focus on the monopoly model i analyze a duopoly model where a foreign firm engages in price based dumping under cournot behavior the anti dumping law has ambiguous price and welfare effects when the home firm is a stackleberg leader two disquieting effects emerge first the home firm can use the anti dumping law to curtail competition even when the foreign firm does not initially engage in dumping second the anti dumping law can increase profits of both firms at the expense of domestic consumers

the existence of equilibrium in discontinuous economic games i theory the article presents information about the existence of equilibrium in discontinuous economic games in this paper and its sequel presents study the existence of nash equilibrium in games where agents payoff functions are discontinuous the enquiry is motivated by a number of recent studies that have uncovered serious existence problems in seemingly innocuous economic games in the sequel to this paper authors have explained the utility function in the economic games referred to earlier are neither continuous nor quasi concave however they demonstrate that the payoff functions in mildly modified versions of these constructs exhibit two weaker forms of continuity which together with the requirement of quasi concavity suffice for the existence of an equilibrium from this one may conclude that at least in the modified versions of these models discontinuities in the payoff functions are not the real source of the problem rather it is the failure of the payoff functions to the quasi concave which is responsible for the non existence of equilibrium these observations bear on the existence of nash equilibrium in pure strategies

optimal fiscal regime in a spatial duopoly abstract we investigate a horizontally differentiated duopoly in which a public authority can either tax or subsidize firms in order to induce duopolists to choose the socially optimal locations the policy proposed here is such that welfare maximization is achieved by directly affecting firms location without explicitly modifying their price behavior

poverty in america 1970 1990 who did gain ground an application of stochastic dominance criteria employing simultaneous inequality tests in a partial panel atkinson 1987 proposed stochastic dominance criteria for analysing poverty which under certain conditions establish orderings of states for any poverty line and any poverty measure within given class refocusing debate on the nature of the income distribution of the poor employing new empirical techniques these criteria are implemented for the united states from 1970 to 1990 using the panel study of income dynamics results highlight the pivotal role of family size scale economies in consumption indicate different experiences for white versus non white groups and suggest that optimism over the progress of the poor is not warranted copyright 2003 john wiley sons ltd

inequality and poverty in united states the effects of rising dispersion of men s earnings and changing family behaviour using semiparametric density estimation techniques we analyse the effect of rising dispersion of men s earnings and related changes in family behaviour on increasing inequality in the distribution of family income in the united states for the period 1969 1989 the growing dispersion of men s earnings and changing family structure can account for most of the rise in family income inequality by contrast the increase in labour force participation by women offset this trend inequality grew at a slower rate in the 1990s than in earlier decades largely because of stabilization in the relative earnings of men from low income families

costly distribution and the non equivalence of tariffs and quotas when governments impose a quota or tariff on imports it is well known that the resulting rents and revenues trigger costly rent seeking and revenue seeking activities which are welfare reducing and may be economically more significant than the efficiency losses resulting from the protectionist induced resource misallocation repeated interaction among firms can eliminate wasteful rent and revenue seeking expenditures through cooperation we show that while aggregate outcomes are equivalent under tariffs and quotas if cooperation arises the conditions under which cooperation arises differ by policy this difference arises because a firm must incur additional cost to physically import and distribute the goods associated with additional quota licenses whereas there is no such cost when it comes to consuming additional tariff revenue thus quotas and tariffs are non equivalent we provide a simple sufficient condition under which cooperative elimination of rent seeking under quotas is easier than cooperative elimination of revenue seeking under tariffs and therefore a quota is the preferred policy whenever the policy admits cooperation

impact of the 2014 suspension agreement on sugar between the united states and mexico in december 2014 the u s and mexico agreed to a suspension agreement that set a 22 25 cwt import price floor on u s sugar imports from mexico a partial equilibrium trade model was developed to estimate the economic impact the agreement would have had if it had been in effect from 2008 to 2014 in years when the price floor would have been binding on average u s producers would have gained 138 million and mexican producers would have lost 218 million however total mexican welfare would have actually increased by 11 5 million furthermore the average price floor that would have maximized total mexican welfare over that period is 22 76 cwt also under certain supply and demand elasticity conditions the average price floor that would have maximized joint u s and mexican producer welfare over that period is 21 91 cwt the latter two estimates are both close to the actual price floor agreed to in the 2014 suspension agreement

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

voluntary export restraints and strategic technology transfers abstract this paper investigates the effects of voluntary export restraints vers in the presence of potential entrants and technology transfers it builds a model of a licensing game in a cournot oligopoly market and examines conditions under which vers induce restrained foreign firms to transfer technologies to potential suppliers i show that a ver can decrease the profit and output of the domestic incumbent by perturbing the no licensing equilibrium reached under free trade and inducing the market to move to a licensing equilibrium

in honor of paul krugman winner of the john bates clark medal paul krugman is the winner of the 1991 john bates clark medal given every two years to that american economist under forty who is adjudged to have made a significant contribution to economic thought and knowledge i shall attempt to convey a flavor of krugman s research contributions grouped into some major themes product diversity and monopolistically competitive trade oligopoly and strategic trade policy the dynamics of trade and exchange rates and much more finally i discuss his brilliant popular book the age of diminished expectations 1991

a welfare comparison between vers and tariffs under the gatt economic theory suggests that tariffs are welfare superior to voluntary export re straints vers in the presence of perfect competition however with imperfectly competitive markets some authors have found that vers may be welfare superior to tariffs we reconsider the comparison between a ver and a tariff in the context of gatt based constraints using a model of perfect competition we show that a ver can welfare dominate a tariff increase that is accompanied by a compensatory reduction in the tariff on another good or if the tariff is matched with a retaliatory tariff on domestic exports une comparaison des effets de bien e tre des restrictions volontaires a 1 exportation et des tarifs douaniers dans le cadre du regime du gatt la theorie economique suggere que

price competition between two international firms facing tariffs abstract this paper examines the effects of tariffs on price setting duopolists selling a homogeneous product the producers cannot segment geographically distinct markets it provides a complete characterization of the equilibrium mixed strategies and analyzes the pattern of competition for different tariffs if a country raises its tariff the profits of both producers increase although the protected firm typically benefits more than its foreign counterpart growth in one market may reduce the profits of the firm located in the other market

general equilibrium effects of import constraints under variable labour supply public goods and income taxation we consider a general equilibrium trade model of a small open economy with a representative consumer where labour supply is variable where imports are restricted by a small tariff a quota or a voluntary export restraint ver and where alongside the production of two traded goods one imported and one exported a pure public good is produced and funded through an income tax within this framework we demonstrate among other things that under certain conditions while a small tariff or quota reduces employment and welfare a ver may increase them thus in the context of a small open economy contrary to standard results in certain cases vers may become the welfare and employment dominant instrument over the alternative import restrictions

import now an analysis of market share voluntary import expansions vies abstract proponents claim that voluntary import expansions vies increase foreign access to a domestic market while increasing competition and reducing prices using a bertrand model i show that a vie produces exactly the opposite results a vie that increases the market share of imports above the prevailing level results in higher prices in the domestic market this result holds even when the domestic market is assumed to be protected by a tariff type barrier prior to the imposition of a vie a vie and an equivalent import subsidy are shown to have opposite effects on prices

voluntary export restraints antidumping procedure and domestic politics a voluntary export restraint ver is preferred to a tariff by a government concerned about electoral returns when the influence of industry profits is large relative to the losses to consumers from higher prices if the foreign firm is uncertain of these pressures the antidumping code facilitates the complete transfer of the relevant information and generates a ver rather than a tariff in equilibrium the choice across instruments is determined by the political attributes domestic and foreign profits rise with the antidumping generated ver and the ver lowers the volume of trade by more than the expected duty copyright 1996 by american economic association

why can t countervailing duties deter export subsidization abstract this paper shows that in a duopoly model of international market competition threatened imposition of countervailing duties by a domestic country generally deters a foreign country from subsidizing its exports to the former to explain the coexistence of export subsidization and the gatt conform countervailing duty measures factors such as delay in retaliation the gatt constraint on the amount of countervailing duties and voluntary export restraints must be considered we find that these factors lessen the efficacy of countervailing duty retaliation and therefore fail to deter export subsidization