uniform versus discriminatory tariffs when will export taxes be used 1 introductionthis paper attempts to combine two branches of strategic trade policy literature together by analyzing choices of export subsidies and import taxes in a unified framework it aims to provide a better insight into the interactions among the governments of two exporting countries and an importing country in a seminal paper brander and spencer 1985 show that under cournot competition a domestic export subsidy allows a domestic firm to gain at the expense of a rival firm in another exporting country their paper initiated a great deal of interest in the proper use of export subsidies 1 it is noted that in the brander spencer and related models the government of the third country which imports the goods from the two countries is assumed to be inactive on the other hand there is a separate literature that analyzes the optimal policies for an importing country which buys a homogeneous product from two countries with rival firms for example gatsios 1990 and hwang and mai 1991 show that the optimal policy for the importing country is to impose a higher tariff on the product from the more cost efficient exporter choi 1995 and horiba and tsutsui 2000 extend the literature by comparing the impacts of discriminatory and uniform tariffs both of these two papers examine the choice of the two tariff regimes by the importing country and investigate how a regime may affect the level of technologies chosen by the exporting firms all these papers focus on the policies of the importing country while assuming that the exporting governments are inactive in this paper we consider a model similar to those examined by all these papers two exporting countries and one importing country with one firm in each of the exporting countries competing in a cournot way what makes the present paper different from others is that we allow all three governments to be active in choosing the optimal values of their policies an export subsidy tax for each exporting country and a tariff subsidy for the importing country we also analyze the impacts of two different tariff regimes a uniform tariff regime as required by the most favored nations mfn clause of the gatt wto and a discriminatory tariff regime choosing between these two types of tariff regimes is an interesting issue in the present framework because it not only determines the welfare of the importing country but also affects the export subsidies chosen by the exporting countries the present more extensive model and analysis as compared with what exists in the literature can be used to answer several questions if each exporting country is aware of the tariffs to be imposed by the importing country on the products from itself and its rival does it still have an incentive to impose an export subsidy as brander and spencer proposed does such an export subsidy depend on whether the importing country is using discriminatory tariffs or a uniform tariff how might the noncooperative equilibrium in terms of export subsidies be affected by the tariff regimes chosen by the importing country what is the optimal tariff of the importing country in response to the export subsidies chosen by the exporting countries how would the importing country choose between the two tariff regimes how would the welfare of these countries be affected by the policies and the policy regimes some of the results obtained in the present paper can be linked to the existing results under a uniform tariff regime as required by the mfn clause the brander spencer argument kicks in and each country has the right incentive to promote the export of its own firm with an export subsidy if the importing country is using discriminatory tariffs the argument in the papers by gatsios 1990 hwang and mai 1991 choi 1995 and horiba and tsutsui 2000 is applicable an importing country tends to impose a higher tariff on the more cost efficient exporter

the case for divisia monetary statistics a bayesian time varying approach abstract the zero lower bound and quantitative easing policies have rekindled interest in the link between monetary aggregates and the business cycle this paper argues on the basis of bayesian time varying coefficient var models that use divisia indexes that money is more closely linked to the business cycle as well as forecasting economic activity more accurately than existing literature claims moreover the relationship between money and economic activity is considerably more pronounced during periods of economic distress such as in the great recession

the relative forecasting performance of the divisia and simple sum monetary aggregates this paper provides direct evidence on the forecasting performance of the divisia monetary aggregates relative to the traditional simple sum monetary aggregates it is shown that forecasts of u s real gdp from a four variable vector autoregression var are most accurate when a divisia aggregate is used rather than a simple sum aggregate particularly at broad levels of aggregation further the two m1 aggregates relative to the broader aggregates are superior predictors of the gdp deflator with a slight edge going to divisia m1 over simple sum m1

interest rates and money in the measurement of monetary policy over the last 25 years a set of influential studies has placed interest rates at the heart of analyses that interpret and evaluate monetary policies in light of this work the federal reserve s recent policy of quantitative easing with its goal of affecting the supply of liquid assets appears to be a radical break from standard practice alternatively one could posit that the monetary aggregates when measured properly never lost their ability to explain aggregate fluctuations and for this reason represent an important omission from standard models and policy discussions in this context the new policy initiatives can be characterized simply as conventional attempts to increase money growth this view is supported by evidence that superlative divisia measures of money often help in forecasting movements in key macroeconomic variables moreover the statistical fit of a structural vector autoregression deteriorates significantly if such measures of money are excluded when identifying monetary

the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

optimum discriminatory tariffs under oligopolistic competition this paper attempts to present a simple cournot model to determine the optimal discriminatory tariff rates when the international market is a homogeneous heterogeneous product market in the model there are two foreign firms located in two different countries competing for sales in a local market when the firms sell a homogeneous product and the home country can impose differential tariffs on imports from different countries then the tariff on the low cost producer should be hgher in particular with constant marginal costs the tariff difference should equal half the cost difference on the other hand if the firms sell differentiated products with symmetric linear demands and technologies then the weaker the degree of product differentiation the greater is the tariff difference compared with the cost difference

domestic export subsidy and foreign welfare abstract in this paper we present an analysis based on imperfect competition to examine the conditions under which an export subsidy of the domestic country will not only increase its own welfare but also raise the welfare of the importing country and hence the world as a whole under these conditions it is then suggested that relaxation of gatt restrictions on export subsidies might be feasible to some extent

industry structure antitrust and tariffs this paper offers an analysis of the relationship between antitrust foreign trade and tariff policy it is shown that while in the static situation a tariff can be interpreted as a barrier to entry tc the foreign firm in the repeated game framework a tariff has an international antitrust property i e it can break up a cartel consisting of international firms the magnitude of the antitrust tariff will depend on factors such as the degree of cost advantage and product differentiation furthermore the antitrust tariff can paradoxically raise import share and reduce the home firm s output

an analysis of the mfn clause under asymmetries of cost and market structure we conduct a welfare comparison of mfn and tariff discrimination in an oligopoly model of trade between two exporting countries and one importing country while mfn dominates tariff discrimination from a world welfare perspective when exporting countries are asymmetric with respect to either cost or market structure such need not be the case when both types of asymmetries co exist in particular when high cost exporters are merged and the cost disadvantage of the merged unit relative to competing firms is of intermediate magnitude tariff discrimination can be welfare preferred to mfn even when the average tariff is actually lower under mfn jel classification f13 f12 une analyse de la clause de la nation la plus favorisee npf quand il y a asymetrie des couts et de la structure de marche ce texte fait une comparaison de bien etre de la clause npf et de la discrimination tarifaire dans un modele oligopolistique de commerce international entre deux pays exportateurs et un pays importateur alors que la strategie npf est superieure a celle de la discrimination tarifaire du point de vue du bien etre mondial quand les pays exportateurs sont asymetriques soit dans leurs couts soit dans la structure du marche tel n est pas necessairement le cas quand les deux types d asymetrie coexistent en particulier quand des exportateurs dont les couts sont eleves sont fusionnes et que le desavantage de couts est d une magnitude moyenne la discrimination tarifaire peut etre preferee a la strategie npf et ce meme quand le droit de douane moyen est en fait plus bas dans un regime npf

money and the natural rate of interest structural estimates for the united states and the euro area abstract we examine the role of money in three environments the new keynesian model with separable utility and static money demand a nonseparable utility variant with habit formation and a version with adjustment costs for holding real balances the last two variants imply forward looking behavior of real money balances with forecasts of future interest rates entering current portfolio decisions we conduct a structural econometric analysis of the u s and euro area economies fiml estimates confirm the forward looking character of money demand a consequence is that real money balances are valuable in anticipating future variations in the natural interest rate

foreign equity participation under incomplete information abstract this paper demonstrates how an interaction between ownership rules and trade policy provides a rationale for a host government to impose local equity requirement ler on a foreign multinational it presents a model where in the presence of an import tariff ler can serve as an effective instrument for a host government in removing any incentive for the multinational to mimic an inefficient firm when the government does not have complete information on the cost of the multinational s foreign unit it is shown that the ler can increase national welfare by removing possible distortions under incomplete information it is also shown that product market competition lowers the ler

money income prices and interest rates including data from the 1980s sharply weakens the postwar time series evidence indicating significant relationships between money however defined and nominal income or between money and either real income or prices separately focusing on data from 1970 onward destroys this evidence altogether evidence indicating cointegration of real income and real money balances with due allowance for the effect of interest rates also deteriorates when the sample extends through the 1980s a positive finding is that the spread between the commercial paper rate and the treasury bill rate consistently contains highly significant information about future movements in real income copyright 1992 by american economic association

optimal contracts with public ex post information abstract we are concerned with the value of public ex post information about a seller s costs to an initially uninformed buyer we derive necessary and sufficient conditions for a public ex post signal s s that is correlated with the risk neutral seller s costs to render the initial information asymmetry inconsequential to the buyer the first best outcome for the buyer is shown to be feasible if 1 the dimension of s is at least that of or 2 the conditional likelihood function of s given is for one of its realizations sj a strictly increasing function of and more concave in than is the seller s cost function

optimal tariffs and the choice of technology discriminatory tariffs vs the most favored nation clause abstract we compare the effects of optimal tariffs on the technology choice of exporters under the discriminatory tariffs regime and the most favored nation mfn clause it is shown that a lower marginal cost mc technology will be chosen in equilibrium under the mfn clause as a result the importing country s long run welfare increases with the adoption of mfn while in most cases the exporting countries welfare decreases however ex post technology choice the importing country prefers discriminatory tariffs this result therefore highlights the role of mfn as a commitment mechanism to resolve a time inconsistency problem facing the importing country

x inefficiency competition and market information whether competition forces firms toward efficient behaviour is an open question we consider a duopoly with firms run by managers and affected by adverse selection on costs in contrast to recent literature we point out that to have a genuine effect on firm x inefficiency competition must change managerial incentives by introducing the availability of some signal on the rivals behaviour we show that if costs are correlated the contractual use of that signal can render private managerial information uninfluential this result stresses the informational role of the market and suggests scope for future work

tariff policy for a monopolist in a signaling game abstract we examine the incentives for a government to levy an optimal tariff on a foreign monopolist with unknown costs with complete information the home government uses a discriminatory tariffs policy to extract rents if the government is incompletely informed about costs we show that under reasonable conditions the unique equilibrium involves pooling where the firm exports the same quantity regardless of its efficiency we find that in general home welfare is higher under alternative policies such as uniform tariffs or free trade suggesting that trade policies that are motivated by rent extraction are unlikely to be robust to the introduction of incomplete information

trade and trade policy with imperfect competition the case of identical products and free entry abstract this paper analyses intra industry trade between economies containing an imperfectly competitive industry in which firms produce a homogeneous output production is subject to increasing returns to scale and there is free entry and exit of firms trade is shown to unambiguously increase welfare by reducing the degree of monopoly in each market and increasing firm size the effects of differences in technology and endowments on the pattern of trade and welfare are examined import tariffs are shown to raise welfare in the country employing the tariff and the welfare implications of various types of industry subsidy are examined

export subsidies and high productivity cause or effect according to the emerging strategic theory of trade policy countries selling in imperfectly competitive world markets may benefit from export subsidies this paper demonstrates that the theory predicts that it is the countries with the lowest production costs that offer the highest subsidies it is argued that this result diminishes the attraction of the theory as a positive explanation of trade policy

the great moderation of the term structure of uk interest rates abstract the conduct of monetary policy the term structure of interest rates and the structure of the economy in the uk have changed over the post wwii period we model the interaction between the macroeconomy and financial markets using a time varying var augmented with the factors from the yield curve there is evidence of a great moderation in the dynamics of the yield curve with the factors being persistent and volatile before the introduction of inflation targeting in 1992 but becoming stable afterwards the introduction of time variation in the factor augmented var improves the fit of the model and results in expectation hypothesis consistent yields that are close to actual yields even at long maturities monetary policy shocks had a significant impact on the volatility of inflation output and the policy rate over the pre inflation targeting era but their contribution has been negligible under the current regime shocks to the level of the yield curve accounted for a large fraction of inflation variability only before 1992

money and output friedman and schwartz revisited more than fifty years ago friedman and schwartz examined historical data for the united states and found evidence of pro cyclical movements in the money stock which led corresponding movements in output we find similar correlations in more recent data these appear most clearly when divisia monetary aggregates are used in place of the federal reserve s official simple sum measures when we use information in divisia money to estimate a structural vector autoregression identified monetary policy shocks appear to have large and persistent effects on output and prices with a lag that has lengthened considerably since the early 1980s

commitment in procurement contracting limited commitment causes inefficient production and source selecti on in a multistage procurement process wherein the contractor has privat e information about uncertain costs a contractor s limited liability l eads a monopsonist to rely more on quantity distortions to extract rents moreover sequential contracting makes it difficult for the buyer to identify the most efficient supplier copyright 1988 by the editors of the scandinavian journal of economics

limited liability contracts between principal and agent abstract the optimal strategy of the principal is examined in an environment where there are ex post limitations on the maximum penalty that can be imposed on a riskneutral agent contrary to the case in which such limitations are not imposed it is in the principal s interest to deliberately forego the opportunity to induce socially efficient behavior and to instead design a contract that induces the agent to realize an efficient outcome only in the most productive state of nature and perhaps in certain very unproductive states the properties of the contract are examined in detail

regulation asymmetric information and auditing this article analyzes a model of a regulated firm that is better informed about its cost function than is the regulator by auditing at a cost however the regulator is assumed to be able to observe the realized cost of the firm if the regulator finds that the firm had misrepresented its costs at the time at which prices were set he can order a refund to consumers in the optimal policy the regulator audits when the firm reports for pricing purposes that its costs will be high and orders a refund when the auditfinds that realized costs are lower than anticipated given the original report a separation result that obtains for an important case indicates that the initial pricing decision is independent of the auditing decision the auditing decision however depends on the price that was initially set the optimal auditing strategy is characterized and the nature of the welfare gains are identified the methodology used in the analysis involves the characterization of an equilibrium of a revelation game with an ex post observable

anti dumping and countervailing duties under oligopoly abstract this paper constructs a conjectural variations model of international oligopoly in which the home country s optimal policy responses to the foreign government s subsidies and foreign firms dumping can be calculated some theoretical support is found for tariffs that countervail part of the foreign export subsidy the optimal fraction depends on the size of own and cross effects in demand and on the extent of market competition however no normative case is found for anti dumping duties

managed trade with imperfect information central to the general agreement on tariffs and trade gatt agreement signed in 1947 by 23 nations was the reduction of tariffs this had the direct result of bringing down the average ad valorem tariff on industrial goods from over 40 in 1947 to under 4 by the time of the uruguay round in 1995 furthermore following the kennedy round of 1969 the objectives of the gatt and of its successor the world trade organization wto were expanded so as to help bring down nontariff barriers as well remarkably these reductions were achieved in the absence of any external enforcement mechanism intended to punish gatt wto violators commitments were kept only as long as nations continued to view adherence to the agreements as being in their mutual interest 2 it is precisely because the contracting parties of the gatt wto have made it their top priority to reduce trade distortions that the subject of safeguards as an exception to the general rule of liberalizing trade comes into play when governments know they can increase tariffs temporarily in the event of a surge in import volume they agree to negotiate a more substantial tariff reduction during the negotiation stage 3 the move toward special protection is motivated in part by the fact that volatility in trade flows has become a more important source of domestic disruption these special protection policy tools are typically used to limit the rate of import or export expansion from that which would occur in the absence of intervention they are aimed at mitigating the underlining changes in trade flows where the basic insight developed in the literature is consistent with different government objectives to this end corden 1974 has argued that countries rarely initiate protection for the purpose of capturing the terms of trade gains presumably because of the fear of future retaliation by their trading partners countries

exchanging market access at the outsiders expense the case of customs unions under a customs union countries can exchange preferential market access by coordinating external tariffs to shift profits from excluded countries i show that the exporting rents resulting from this coordination can offset trade diversion losses produced by the union even if its members are relatively small in world markets such gains come however at the expense of excluded countries i show that small countries can use customs unions also to foster multilateral cooperation by increasing the incentives of excluded countries to support global free trade le cas des unions douanieres dans le cas d une union douaniere les pays peuvent marchander l acces preferentiel a un marche en coordonnant leurs tarifs externes de maniere a extraire des profits des pays exclus on montre que les rentes a l exportation qui resultent de cette coordination peuvent compenser les pertes attribuables a la diversion du commerce qui decoule de l union douaniere meme si ses membres sont relativement de petite taille dans les marches mondiaux de tels gains se font cependant aux depens des pays exclus on montre que les petits pays peuvent utiliser les unions douanieres pour stimuler la cooperation multilaterale en accroissant les incitations des pays exclus a poursuivre des strategies de libre echange global

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

a complete solution to a class of principal agent problems with an application to the control of a self managed firm this paper considers a class of principal agent problems which have the following features 1 there is adverse selection because the principal ignores the value of one parameter of the agent s true characteristics 2 leaving aside the information parameter the principal s welfare as well as the agent s welfare depend on two types of variables observable to both of them the first ones possibly multidimensional are called action variable s and the second one which is one dimensional has in general the meaning of a money transfer 3 the principal is a stackelberg leader of the two person game he can commit himself to decision rules which are admissible on informational grounds he optimizes within the adequate class taking into account besides the agent s reaction one constraint which has generally the meaning of an individual rationality constraint and sometimes of a feasibility constraint the optimization is limited to the class of non stochastic mechanisms 4 the problem can also receive an alternative interpretation the principal faces a continuum of agents of unknown characteristics the distribution being known however stylized principal agent problems of this type have often been considered in the economic literature in particular the reader will later be able to recognize that the standard income tax model a la mirrlees 1971 the quality or quantity choice model of the monopolist a la mussa and rosen 1978 or maskin and riley 1982 and the model of government regulation of the private monopolist of baron and myerson 1982 all belong to

the role of mfn under asymmetries in environmental standards abstract we critically examine the implications of the most favored nation mfn clause under asymmetric environmental standards using an oligopolistic intra industry trade model we show that environmentally beneficial trade diversion and higher world welfare obtain under tariff discrimination relative to mfn

has monetary policy become more effective we investigate the implications of changes in the structure of the u s economy for monetary policy effectiveness estimating a vector autoregression over the pre and post 1980 periods we provide evidence of a reduced effect of monetary policy shocks in the latter period we estimate a structural model that replicates well the economy s response in both periods and perform counterfactual experiments to determine the source of the change in the monetary transmission mechanism and in the economy s volatility we find that by responding more strongly to inflation expectations monetary policy has stabilized the economy more effectively in the post 1980 period

optimal incentive contracts with multiple agents abstract a setting in which a single principal contracts with two agents who possess perfect private information about their own productivity is considered with correlated productivities each agent s private information also provides a signal about the other agent s productivity in contrast to the setting in which there is only one agent it is shown that such private information may be of no value to the agents it is only if the agents are risk averse that their private information may allow them to command rents moreover when the agents are constrained only to reveal their private information truthfully as a nash equilibrium the pareto optimal incentive scheme may induce the agents to adopt strategies other than truth telling this leads to the consideration of truth telling equilibria that are not pareto dominated in the subgame played by the agents among all such equilibria the one preferred by the principal restricts one agent to tell the truth as a dominant strategy and the other as a nash response to truth

on the emergence of an mfn club equal treatment in an unequal world motivated by gatt we endogenize the formation of a club whose members have to abide by the mfn principle of non discrimination the underlying model is that of oligopolistic intraindustry trade while an mfn club does not alter average tariff levels across countries it increases aggregate world welfare makes non members worse off and can immiserize its high cost members these results imply that i core wto rules such as mfn are valuable even if multilateral negotiations deliver limited trade liberalization and ii the distributional effects of mfn maybe one reason why developing countries have been granted special and differential treatment at the wto jel classification f13 f10 f15

information incentives and organizational mode we examine the choice of organizational mode for a two stage production process wherein cost realizations at each stage are observed only by the producing party when these costs are positively correlated the principal prefers to undertake second stage production herself when the correlation is negative and sufficiently small she will prefer that the agent who performs the first stage also perform the second for large negative correlation either mode might be preferred when costs are uncorrelated the principal is indifferent between modes

the structural dynamics of output growth and inflation some international evidence we examine the dynamics of output growth and inflation in the us euro area and uk using a structural time varying coefficient var there are important similarities in structural inflation dynamics across countries output growth dynamics differ swings in the magnitude of inflation and output growth volatilities and persistences are accounted for by a combination of three structural shocks changes over time in the structure of the economy are limited and permanent variations largely absent changes in the volatilities of structural shocks matter

the evolution of u s monetary policy 2000 2007 abstract a vector autoregression with time varying parameters is used to characterize changes in federal reserve policy that occurred from 2000 through 2007 and describe how they affected the performance of the u s economy declining coefficients in the model s estimated policy rule point to a shift in the fed s emphasis away from stabilizing inflation over this period more importantly however the fed held the federal funds rate persistently below the values prescribed by this rule under this more discretionary policy inflation overshot its target and the funds rate followed a path reminiscent of the stop go pattern that characterized fed behavior prior to 1979

functional monetary aggregates monetary policy and business cycles abstract in this paper we take the economic approach to monetary aggregation in the context of highly disaggregated demand systems encompassing the full range of monetary assets in the united states we estimate the effectively globally regular minflex laurent ml and normalized quadratic nq flexible functional forms we produce the ml and nq functional monetary aggregates consistent with neoclassical microeconomic theory also addressing the issue of optimal monetary aggregation we highlight the influence of measurement on statistical inference by investigating whether the ml and nq functional monetary aggregates are of importance in resolving paradoxes associated with the measurement of money in doing so we also provide a comparison between the functional monetary aggregates and the fed s broad sum m2 aggregate and the center for financial stability broad divisia m3 and divisia m4 aggregates our detailed statistical analysis favors the functional monetary aggregates

designing credit agent incentives to prevent mission drift in pro poor microfinance institutions abstract credit agents in microfinance institutions mfis must be given incentives to acquire information on potential borrowers and select them in accordance with the mfi s objectives we show that while giving incentives has no cost in for profit mfis it is costly in pro poor mfis when repayment and wealth are positively correlated a pro poor mfi cannot obtain the selection of poor clients in the proportion it wishes with incentives based solely on repayment it then becomes necessary to audit the share of very poor borrowers selected by an agent in order to provide the latter with adequate incentives when audit costs are large pro poor mfis may have to forego selection on wealth and use other targeting devices such as working in impoverished geographical locations driven by donor concerns with mission drift away from the poor audits on the wealth status of clients have been introduced at the level of mfis we show that introducing pro poor incentives requires extending such audits to the level of credit agents

tariffs and the most favored nation clause abstract in an n country oligopoly model of intraindustry trade n 3 this paper explores the economics of the most favored nation mfn principle under the non cooperative tariff equilibrium each country imposes higher tariffs on low cost producers relative to high cost ones thereby causing socially harmful trade diversion mfn adoption by each country improves world welfare by eliminating this trade diversion under linear demand mfn adoption by the country with the average production cost is most desirable high cost countries refuse reciprocal mfn adoption with other countries and also lose even if others engage in reciprocal mfn adoption amongst themselves

structural changes in the us economy is there a role for monetary policy this paper investigates the contribution of monetary policy to the changes in output growth and inflation dynamics in the us we identify a policy shock and a policy rule in at ime varying coefficients var using robust sign restrictions the transmission of policy shocks has been relatively stable the variance of the policy shock has decreased over time but policy shocks account for a small fraction of the level and of the variations in inflation and output growth volatility and persistence we find little evidence of a significant increase in the long run response of the interest rate to inflation a more aggressive inflation policy in the 1970s would have produced large output growth costs

full extraction of the surplus in bayesian and dominant strategy auctions we consider auctions for a single indivisible object in the case where the bidders have information about each other which is not available to the seller we show that the seller can use this information to his own benefit and we completely characterize the environ ments in which a well chosen auction gives him the same expected payoff as that obtainable were he able to sell the object with full information about each bidder s willingness to pay we provide this characterization for auctions in which the bidders have dominant strate gies and for those where the relevant equilibrium concept is bayesian nash in both set ups the existence of these auctions hinges on the possibility of constructing lotteries with the correct properties we consider the situation in which an agent the seller possesses one indivisible unit of a good to which he attaches no value but the good has value to a number of potential buyers and its transfer to one of them would increase social welfare in particular the transfer to the buyer with the highest valuation maximizes social welfare in this paper we completely characterize environments in which the seller can design an auction that will enable him to capture for himself the full increase in social welfare induced by the transfer of the good to the bidder with the highest willingness to pay if the seller had full information about the reservation prices of potential buyers his optimal selling strategy would be very simple he would announce a price equal or very close to the highest reservation value the optimal strategy for the bidder with the highest evaluation would be to accept the offer note that we are treating a situation in which the seller can commit himself to a price as a result of the exchange the utility of the seller increases by the full amount of the increase in social welfare and he has been able to fully extract the surplus in many circumstances however a seller has only imperfect knowledge of the buyers willingnesses to pay in this case he must find some mechanism or auction which will enable him to maximize his benefit from the sale of the object the auction literature starts with this observation and shows how the seller can by an astute choice of auction extract the largest possible fraction of the surplus in general the literature has shown that this proportion is strictly less than one in some circumstances the bidders will have information about each other which is not available to the seller for instance in auctions for petroleum drilling rights bidders know the results of geological tests which they have

tariffs licensing and market structure this paper challenges the conventional wisdom that exclusive owners of an advanced technology are always better off when producing as a monopolist than when competing against another firm competition against a less efficient firm weakens the power that a host country can exert on the incumbent in the form of its tariff policy we show that this gives a motive for a monopolist to license its technology to another foreign firm a host country gains more from increased competition if it can induce the foreign incumbent to transfer technology to the host country firm we show that the host country can do so by tariff commitment we also discuss the implications of bargaining under licensing and bertrand competition in the product market hence this paper qualifies and extends the recent work of kabiraj and marjit protecting consumers through protection the role of tariff induced technology transfer european economic review 47 113 124

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had

uncertainty asymmetric information and bilateral contracts on considere un monopole bilateral avec incertitude et information asymetrique on donne les conditions necessaires et suffisantes a l existence de contrats qui soient efficaces et a la fois stimulants