global warming technological change and trade in carbon energy challenge or threat is it possible to combat global climate change through north to south technology transfer even without a global climate treaty or do carbon leakage and the rebound effect imply that it is possible to take advantage of technological improvements under the umbrella of a global arrangement only for answering these questions two possible states of the world are discussed one where more energy efficient technologies are transferred unconditionally from the north to the south and where regions do not cooperate in the solution of the global climate problem but unilaterally decide on climate policies and technology transfers one where the north to south technology transfer is tied to the requirement that the south in some way contributes to the solution of the global climate problem rebound and leakage effects hinder a sustainable and welfare improving solution of the climate problem

taxation government spending and labor supply a diagrammatic exposition the effects of a change in the level of taxation on labor supply are examined under the assumption that the government budget balances the government spends tax revenues either on redistributions which are assumed to have an income effect on labor supply or on other government goods which are assumed not to influence labor supply in order for a rise in the tax rate to increase the quantity of labor supplied it must be that i the labor supply function bends backward and ii sufficiently little of the increased tax revenues are redistributed the quantity of labor supplied must fall if all marginal tax revenues are redistributed

transfers and the generalized theory of distortions and welfare recent theoretical attention devoted to the transfer paradox has included attempts to incorporate it into the body of commercial policy in this paper the existence of a family of always feasible corrective tax policies is proved which guarantees normal welfare response the set of pol icies is shown to contain the external trade fixing tariff and the op timal tariff the set of policies is then extended to include a capit al flow fixing profits tax to deal with the problems of foreign inves tment the results are then interpreted in terms of a general proposi tion in the theory of distortions and welfare copyright 1987 by the review of economic studies limited

transfer problem dynamics macroeconomics of the franco prussian war indemnity we study the classic transfer problem of predicting the effects of an international transfer on the terms of trade and the current account a two country model with debt and capital allows for realistic features of historical transfers they follow wartime increases in government spending and are financed partly by borrowing the model is applied to the largest historical transfer the franco prussian war indemnity of 1871 1873 in these three years france transferred to germany an amount equal to 22 percent of a year s gdp when the transfer is combined with measured shocks to fiscal policy and productivity over the period the model provides a very close fit to the historical sample paths of french gdp terms of trade net exports and aggregate consumption this makes a strong case for the dynamic general equilibrium approach to studying the transfer problem more generally our results provide striking evidence of the importance of international capital markets in the nineteenth century

advantageous reallocations a constructive example this note shows how to construct smooth examples of a phenomenon noted by gale in which a pair of agents make themselves better off at the expense of a third agent by reallocating their own endowments walrasian stability prevails

country of origin effects on product evaluations this article reviews the literature regarding the effect of country of origin on buyer evaluations of products the issue is important for countries especially resource poor developing countries that need to increase manufactured exports and for firms that source products in countries different from where sold marketing inferences are drawn and implications for future research are developed

the generalized multinomial logit model accounting for scale and coefficient heterogeneity the mixed or heterogeneous multinomial logit mixl model has become popular in a number of fields especially marketing health economics and industrial organization in most applications of the model the vector of consumer utility weights on product attributes is assumed to have a multivariate normal mvn distribution in the population thus some consumers care more about some attributes than others and the iia property of multinomial logit mnl is avoided i e segments of consumers will tend to switch among the subset of brands that possess their most valued attributes the mixl model is also appealing because it is relatively easy to estimate recently however some researchers have argued that the mvn is a poor choice for modelling taste heterogeneity they argue that much of the heterogeneity in attribute weights is accounted for by a pure scale effect i e across consumers all attribute weights are scaled up or down in tandem this implies that choice behaviour is simply more random for some consumers than others i e holding attribute coefficients fixed the scale of their error term is greater this leads to a scale heterogeneity mnl model s mnl here we develop a generalized multinomial logit model g mnl that nests s mnl and mixl by estimating the s mnl mixl and g mnl models on 10 data sets we provide evidence on their relative performance we find that models that account for scale heterogeneity i e g mnl or s mnl are preferred to mixl by the bayes and consistent akaike information criteria in all 10 data sets accounting for scale heterogeneity enables one to account for extreme consumers who exhibit nearly lexicographic preferences as well as consumers who exhibit very random behaviour in a sense we formalize below

foreign ownership and the theory of trade and welfare some standard topics in the theory of international trade are reconsidered in this paper by distinguishing between national and aggregate income when fixed supplies of foreign inputs are present within the home country under conditions that would ensure a national welfare gain if foreign ownership were absent international transfer economic growth or tariff policy might cause a national welfare loss in the presence of foreign ownership the techniques developed could be applied to other domestic distinctions such as those based on race sex age or ethnicity and to the theory of customs unions in a three country world

sense and surprise in competitive trade theory 2010 weai presidential address i introduction the competitive theory of international trade is well known for its abundance of paradoxes perhaps the most widely known is the leontief paradox associated with the rather startling results presented by leontief 1953 that the trade pattern of the united states suggested that its export sectors were more labor intensive than factor proportions found in its import competing sectors this result stimulated decades of research but is not the focus of the present paper other so called paradoxes include the metzler 1949 result wherein a country levying a tariff on an imported item may end up with a lowering of its domestic price that is a tariff may not be protective 1 lerner 1936 who earlier hinted at the metzler outcome emphasized the possibility that a tariff might instead worsen a country s terms of trade which is at the opposite extreme to the metzler result both of these paradoxes are attributed to possible income effects in demand more recently income effects stemming from asymmetry in demand patterns among countries were shown to open the door to paradoxical results if one country makes a transfer to another in a world in which other countries are also engaged in trade in the same commodities the surprising results the giver in the transfer might end up better off i e it may pay to give rather than to receive and or the recipient of the transfer may end up worse off 2 finally a classic result that does not depend on asymmetries in taste patterns but rather upon the degree of elasticity in demand and the nature of growth is the question of whether a country that unequivocally grows transformation schedule shifts out can be made worse off as a consequence of growth the so called immiserizing growth paradox 3 this is an issue familiar to particular sectors of the economy for example agriculture can a good harvest yield lower returns because of the subsequent price fall instead of revisiting these familiar paradoxes here i wish to concentrate on the production side of competitive models used in international trade and to focus on the question involving ways of judging economic models clearly the question of realism often comes up whether it is in terms of assumptions made or of outcomes expected here i suggest a different criterion does the model conform in many ways to common sense that is would one be tempted to suggest that the model is not necessary because common sense would lead to the same results and if it does do the outcomes in certain scenarios seem to be paradoxical or surprising if so can the model reveal in simple terms why these somewhat surprising results make sense 4 i shall restrict myself to a pair of basic models of production used in competitive trade theory the specific factors model on the one hand and the heckscher ohlin model on the other i shall argue that in many ways both conform to common sense but in addition provide the very tools that expose the underlying rationale for surprise ii a preliminary question consider any economy that is characterized by competitive markets and constant returns to scale technology suppose for such an economy there is an increase in the factor endowment bundle to fix on an example suppose there is an increase in the economy s labor force the very general question i wish to ask is how does such an economy absorb this increased endowment to maintain full employment of all factors note that if this economy is not engaged in international trade there will likely result a change in commodity prices as they adjust in order to equilibrate local supply and demand given the points i wish to make later let me assume that the country is engaged in free trade with the rest of the world if this economy were particularly small world prices could be taken as given even if world prices are disturbed it is legitimate to ask how the economy absorbs the extra supplies before any change in commodity prices takes place

poverty and public policy the problem of poverty is particularly acute in india with 14 of the world s population we have the misfortune of having almost twice as large a share of the world s poor indeed as i shall presently underline the question of poverty and its amelioration has been at the center of our concerns from the beginning of our planning efforts almost four decades ago little therefore can be said on it that some distinguished indian economist has not already said in some ways therefore to talk on the design of public policy for poverty to an indian audience is to carry coal to newcastle or as the old saying goes to teach your grandmother how to suck eggs nonetheless i hope to provide a fresh perspective by putting the problem into an explicit analytical framework that permits alternative policy designs to be sharply defined and contrasted i also intend to draw on international experience to put our efforts and problems into both historical and comparative perspectives

distortions true trade price and quantity indices and welfare trade expenditure functions are used to develop true trade price and quantity indices for multihousehold open economies with domestic distortions such as commodity or production taxes subsidies factor unemployment or exogenous factor price differentials these indices are then used to analyse the welfare effects of changes in world market prices and or the distortions in contrast to earlier literature we derive a set of novel globally valid necessary and sufficient conditions for gains from trade in the presence of the listed distortions novel sufficient conditions for welfare improvement which are readily measurable are also proven

explaining the choice of organic produce cosmetic defects prices and consumer preferences the choice between organic and conventional produce was estimated empirically using a two equation probit model data were collected in store on cosmetic defects produce prices and consumers demographic and economic traits store choice displayed a significant impact on the probability of purchasing organic produce shoppers at the specialty grocer were sensitive to price differences between organic and conventional items households with children under eighteen were more likely to purchase organic produce while shoppers with graduate or professional degrees were less likely to do so differences in cosmetic defects had statistically significant albeit small effects on the probability of purchasing organics

a result on the transfer problem in international trade theory abstract the purpose of this paper is to provide a result on the welfare effect of a transfer in a general equilibrium exchange model with no arbitrary restrictions on either the number of commodities traded or the number of countries our result can be stated as follows the donor country is worse off after a transfer if a all goods are net substitutes for the donor b all goods are gross substitutes for the other countries and c all goods are normal for all countries

the transfer paradox in a one sector overlapping generations model abstract this paper examines the effects of international income transfers on capital accumulation and welfare in a one sector overlapping generations model it is shown that a strong form of the transfer paradox in which the donor country experiences a welfare gain while the recipient country experiences a welfare loss may occur both in and out of steady state in addition it is shown that a weak form of the transfer paradox where either the donor or recipient but not both experiences a paradoxical welfare effect may characterize all segments of the transition path not already characterized by the strong transfer paradox

a heterogeneous conditional logit model of choice aggregate forecasts using mcfadden s conditional logit model of discrete choice harbor the unrealistic implicit assumption of a random utility distribution that is homogeneous across both alternatives and individuals this article relaxes that assumption a choice model is developed that describes the random utility component as a probability mixture model some numerical results illustrate that the derived model is not constrained by the independence of irrelevant alternatives property an experimental test of visual perceptions demonstrates the potential superiority of the model

international investment and immiserizing growth abstract a country with significant foreign investment can be immiserized by growth of its labor force because this increases the payments that have to be made to foreign investors we show that this occurs when the elasticity of supply of foreign capital and the elasticity of substitution between labor and capital in the host country are low we relate this phenomenon to bhagwati s general analysis of immiserizing growth and identify several new sources of immiserization that can arise from the interaction of the bhagwati johnson mechanisms and international investment

a repeated nested logit model of atlantic salmon fishing participation and site choice for atlantic salmon fishing are modeled in the context of a repeated three level nested logit model consumer s surplus measures are derived for different levels of species availability in the penobscot river the most important salmon river in new england for comparison six other travel cost models are estimated these include restrictive cases of the nested logit model a partial demand model and two single site demand models comparisons across these models indicate the importance of modeling the participation decision including income effects and of adopting a nested logit structure rather than a single level logit structure

who should abate carbon emission we review the optimal pattern of carbon emission abatements across countries in a simple multi country world we model explicitly with the model in chichilnisky 4 the fact that the atmosphere is a public good within this framework we establish conditions for it to be necessary for optimality that the marginal cost of abatement be the same in all countries these condition are quite restrictive and amount to either ignoring distributional issues between countries or operating within a framework within which lump sum transfers can be made between countries these results have implications for the use of tradeable emission permits which as normally advocated will lead to the equalization of marginal abatement costs across countries the observation that the atmosphere is a public good implies that we may need to look at a lindahl equilibrium rather than a walrasian equilibrium in tradeable permits

the economics of country specific tariffs a three country model of the world economy is used to show that when effective a country specific tariff will have an impact on the world economy that is equivalent to the imposition of a uniform tariff plus a subsidy to the production of home importables in the favored country financed by a transfer from the home country lerner s symmetry theorem and the optimum tariff problem are discussed country specific tariffs were a prominent feature of the congressional debate surrounding the recent u s trade bill a preliminary version of the bill which passed the house contained the well known gephardt amendment that would have required increased tariffs or quotas on imports from countries running unacceptably large bilateral trade surpluses with the u s in addition since 1976 the u s has allowed most goods produced in less developed countries to enter duty free under its version of the generalized system of preferences the country specific nature of these preferences runs contrary to all previous u s trade policy and sparked controversy in the u s congress when the original legislation was passed in 1974 and again when it was extended in 1984 while country specific tariffs are a relatively new feature of u s trade policy they have an established history in other countries prior to joining the european economic community great britain granted preferential tariff rates on imports from the commonwealth countries moreover these countries granted tariff preferences to less developed countries nearly five years before the u s initiated its general system of preferences program a proper theoretical analysis of country specific tariffs and preferential tariff reductions requires a multi country model however most work on tariff policy uses the standard two country framework almost all of the multi country models found in the literature consider only uniform tariffs or as in the customs union literature consider preferential tariffs as part of a multilateral effort to coordinate trade policies rather than as a unilateral policy instrument an exception is the partial equilibrium analysis of mcculloch and pinera 1977 they consider a three country world economy and examine the impact of a preferential tariff reduction

income redistribution an international perspective many view global income inequality as a problem income redistribution from the rich countries to poor countries is often offered as a solution however such redistribution would have to be politically acceptable to voters in rich countries to occur using a constructed distribution of world income we show that even modest income redistribution efforts would impose significant costs on taxpayer voters in rich countries we conclude such income redistribution is unlikely

magnitude and direction of technological transfers for mitigating ghg emissions this paper discusses the issues of technological transfers aimed at reducing ghg mitigation costs under various assumptions in a new version of rice model we introduce technological transfer mechanism that donors monetary transfers go to recipients ghg mitigation through such transfer mechanism we examine the relationships between magnitude direction of transfers and choice of social welfare weights in the model our simulations show that different social welfare weights may lead to significant shifts on magnitudes even directions of technological transfers the results suggest that proposing policies of technological transfers should be mindful of distributional aspects and modeling assumptions

the global correspondence principle a generalization this paper generalizes the global correspondence principle by extending in two major ways samuelson s 1971 analysis of the exchange rate response to an international purchasing power transfer first the authors analyze the price effect of a shift in anyparameter not necessarily a transfer second the authors explore the resulting adjustments in any nonprice variable such as welfare as the analysis shows the direction of these adjustments depends neither on whether they are small or large nor on whether equilibrium is locally stable or unstable thus the authors generalize the conventional algebra of comparative statics which typically assumes small shifts from a stable equilibrium copyright 1987 by american economic association

the possibility of recipient harming donor benefiting transfers with more than two countries the possibility of a commodity transfer among nations which simultaneously benefits the donor and harms the recipient is examined an example of a three country exchange economy is presented where a transfer may be made which gives the counter intuitive result the result is then explained

the generalized theory of transfers and welfare bilateral transfers in a multilateral world paul samuelson s 1952 1954 classic papers on the transfer problem addressed two separate analytical issues the positive effect of a transfer on the terms of trade and the welfare effect of the transfer on the donor and the recipient since then a considerable body of literature has grown up on the positive analysis while samuelson 1954 himself had extended the 2 x 2 x 2 free trade analysis to allow for tariffs and transport costs subsequent writers have analyzed other extensions of the model for example to allow for nontraded goods as with leisure in samuelson 1971 or general nontraded goods in john chipman 1974 and ronald jones 1970 1975 remarkably however the welfare analysis of transfers has not paralleled these developments since wassily leontief 1936 produced an example of immiserizing transfer from abroad and samuelson 1947 argued that the example required market instability the proposition that has monopolized attention has been that a transfer in the conventional 2 x 2 x 2 model in its free trade version cannot immiserize the recipient or enrich the donor as long as world markets are stable in the walras sense interestingly samuelson 1954 who did extend the positive analysis to include tariffs did not go on to ask whether immiserization of the transfer recipient and hence symmetrically enrichment of the donor in a two country model could now arise consistent with market stability recently the welfare analysis of transfers has been extended in two different directions both apparently unconnected and both yielding the conclusion that transfers from abroad can be immiserizing and that the donor may improve its welfare despite market stability one route to this conclusion has been the introduction of a third economic agent or country that is outside of the transfer process in the appendix of his 1960 paper analyzing the interaction between trade policy and income distribution harry johnson discussed the possibility of welfareparadoxical redistribution between two factor income classes capital and labor in an open economy thereby providing what can be interpreted as a treatment of the threeagent transfer problem for the case in which donor and recipient are both completely specialized in the ownership of a single different factor an independent analysis of the three agent transfer problem using a restrictive model with given endowments of goods and fixed coefficients in consumption was also undertaken in an important paper by david gale 1974 2 brecher and bhagwati bhagwati department of economics columbia university new york ny 10027 brecher department of economics carleton university ottawa on kis 5b6 hatta department of political economy the johns hopkins university baltimore md 21218 we thank the national science foundation grant no 524718 for partial financial support of the research underlying this paper the paper was written when brecher and hatta were visiting columbia university 1981 82 gratefully acknowledged are helpful comments and suggestions from john chipman avinash dixit jacques dreze robert feenstra jacob frenkel ronald jones murray kemp andreu mas colell michael mussa john riley lars svensson and robert willig from anonymous referees and from seminar participants at berkeley harvard minnesota rochester chicago and the university of california los angeles after the present paper was submitted for publication and following its presentation at rochester our attention was drawn to this appendix which was noticed by a student of ronald jones subsequently we learned from makoto yano that motoshige itoh had pointed out an important related paper by ryuotaro komiya and t shizuki 1967 whose condition 11 for the johnson case anticipated our equation 12 below we are grateful for having both of these references brought to our attention 2 gale constructs an example in which the donor is enriched along with the recipient furthermore this immediately implies that a reverse transfer will immis

competition for aid and trade policy this paper considers the optimal allocation of a given amount of foreign aid between two recipient countries it is shown that given consumer preferences a country following a more restrictive trade policy would receive a smaller share of the aid if the donor country maximises its own welfare in allocating aid if on the other hand the donor country allocates aid in order to maximize the sum of the welfare of the two recipient countries the result is just the opposite finally we analyze the situation where the recipient countries compete with each other for the given amount of aid it is shown that this competition tends to lower the level of optimal tariffs in the recipient countries

foreign aid domestic investment and welfare this paper examines the welfare implications of temporary foreign aid in a simple two period two country model of trade domestic investment is endogenous providing an important link between aid in period one and the terms of trade in periods one and two transfer induced changes in the terms of trade redistribute present and future income between the donor and the recipient in the presence of barriers to international borrowing and lending such redistribution gives rise to the possibility of temporary aid being both potentially and strictly pareto improving

strategic transfers and private provision of public goods abstract this paper considers strategic monetary transfers between two agents when these contribute to a mutual public good if the agents differ in their contribution productivity then the less productive agent has an incentive to make large unconditional transfers to the more productive agent although agents move simultaneously in each stage of the game the less productive agent becomes a stackelberg leader furthermore the generic subgame perfect equilibrium is characterized by full specialization

consumers preferences for fresh broccolis interactive effects between country of origin and organic labels while international trade in organic products has grown significantly understanding consumers preferences for imported organic foods has remained limited this research examines the impact of country of origin labeling on us consumers choices of organic foods results show that consumer valuation of domestically produced organic broccoli was significantly higher than that of imported organic broccoli adding information about usda organic certification standards rules for imported products mildly increases consumer valuation of imported organic broccoli in some cases these findings suggest that providing such information may have a positive impact on consumer willingness to purchase imported organic products

give and take how the funding of adaptation to climate change can improve the donor s terms of trade this paper discusses the interplay between international trade regional adaptation to climate change and financial transfers for funding adaptation it combines insights from a theoretical model of north to south transfers with the findings of a calibrated dynamic multi region multi sector computable general equilibrium model that takes into account the impacts of climate change and the adaptation to it assessing the effects of adaptation funding indicates that funding of adaptation in developing regions can be pareto improving not only will developing regions which do not own sufficient resources for adapting optimally profit from receiving adaptation funding terms of trade improvements in the high and middle income donor countries can dominate transfer costs and hence lead to a net welfare gain in almost any developed region except north america as such our consideration adds a new argument for financially supporting adaptation in the developing world besides the well known ones such as fairness and incentives for participation in a global climate treaty

international cooperation on climate friendly technologies we examine international cooperation on technological development as an alternative to international cooperation on emission reductions we show that without any r d cooperation r d in each country should be increased beyond the non cooperative level if i the technology level in one country is positively affected by r d in other countries ii the domestic carbon tax is lower than the pigovian level or iii the domestic carbon tax is set directly through an international tax agreement we also show that a second best technology agreement has higher r d higher emissions or both compared with the first best outcome the second best subsidy always exceeds the subsidy under no international r d cooperation further when the price of carbon is the same in the second best technology agreement and in the case without r d cooperation welfare is highest r d is highest and emissions are lowest in the second best r d agreement

does local labeling complement or compete with other sustainable labels a conjoint analysis of direct and joint values for fresh produce claim as a way to explore the increasing use of sustainability labels in the marketplace this study analyzes the differential values and interactive effects of sustainable production claims organic fair trade and carbon footprint and location claims through a conjoint choice experiment included in a 2008 u s survey locally grown is the highest valued claim and its value is further enhanced with fair trade certification but carbon intensive local products are discounted more severely than those sourced from other locations some negatively valued claims imports and carbon footprint can be mitigated by combining them with other claims organic and fair trade copyright 2011 oxford university press

the measurement of waste in a public goods economy abstract a small open economy model is developed to measure the waste of the whole economy when levels of public goods are determined by the government the allais debreu diewert measure of waste is defined and its second order approximation is calculated this measure utilizes the second order substitution matrices of the restricted profit function and the restricted expenditure function evaluated at an equilibrium finally simple examples and diagrams are utilized to clarify the economic implications of our approach

the measurement of the benefits of public inputs with distortionary taxation this paper derives formulae that show the marginal benefits of public inputs in second best economies with tax distortions the values of the change in the aggregate net output vector and in some cases the change of profit income evaluated at appropriate shadow prices show their marginal benefits these shadow prices depend on which taxation scheme you can perturb when the amount of a public input is increased the author considers the three cases where he can change 1 all indirect tax rates and all corporate income tax rates 2 all lump sum transfers and 3 some part of indirect tax rates

optimal foreign aid and tariffs this paper investigates the optimal choice of foreign aid when trade policies are decided in a non cooperative fashion three alternative scenarios depending on the timing of the actions and on whether aid is tied are analyzed it is shown that in the case where aid is decided before tariffs untied aid can lead to the reduction of the recipient s optimal trade tax when the donor can tie the aid to a reduction in the recipient s tariff the optimal aid level is always positive and the world can always achieve a pareto efficient equilibrium

stated and revealed preferences for organic and cloned milk combining choice experiment and scanner data the u s food and drug administration s recent announcement that milk from cloned cows is as safe to drink as that from conventionally bred cows prompted interest among farmers food retailers and regulators in the market impacts of the introduction of milk from clones because milk from cloned animals is not currently labeled in the market we utilized a stated preference experiment to determine consumer preferences for the attribute but also sought to determine whether the survey based choices were consistent with people s revealed preferences given by scanner data our analysis indicates that a pooled model combining stated and revealed preference data exhibits overall better out of sample prediction performance than either data set used alone results from the pooled model indicate that consumers are willing to pay large premiums to avoid milk from cloned cows an amount that is over three times that for organic or rbst free milk the results are used to calculate the value of a mandatory labeling program

tax rates and labor supply in fiscal equilibrium tax rates and labor supply in fiscal equilibrium i introduction if the government changes the tax on wage income what happens to aggregate labor supply this question is at the core of debates between proponents of supply side and keynesian approaches to government fiscal policy it is unfortunate therefore that previous attempts to resolve the issue have obscured decisive assumptions regarding the preference relation between leisure and public spending one argument exposited recently by gwartney and stroup 1983 1986 and ehrenberg and smith 1988 179 80 descends from an older literature represented by the works of friedman 1949 1954 goode 1949 scitovsky 1951 and bailey 1954 and emphasizes the importance of a balanced budget framework for addressing the question this approach reveals the presence of an income effect caused by the change in government spending that must accompany the tax change at optimum according to this view this income effect exactly offsets the income effect of the tax change so that only the substitution effect of the tax remains as a consequence a balanced budget increase in the wage tax unambiguously decreases economy wide labor supply provided the increase in public spending is valued the same as the forgone private spending a different approach was initiated by winston 1965 and subsequently elaborated upon by lindbeck 1982 fullerton 1982 hanson and stuart 1983 bohanon and van cott 1986 and gahvari 1986 this approach stresses the importance of the preference relation between public spending and private spending rather than the role of the public spending income effect in determining the change in aggregate labor supply as a special example gahvari 1986 assumes a preference structure which implies that public spending does not have any influence on labor supply so there is only the partial equilibrium effect of the tax however the general conclusion of this line of reasoning is that the theoretical ambiguity of the labor supply response arises from both tax and spending effects in this paper a simple formal model is used to develop a careful accounting of the various income and substitution effects the model is sufficiently general to permit a rigorous comparison of earlier studies and to expose implicit assumptions responsible for their conclusions we show that the two approaches outlined above are associated respectively with the focal cases of compensated independence and ordinary independence between leisure and public spending the pan of the paper is as follows section ii contains a model of labor supply in the presence of wage taxation and public spending in section iii the effect on aggregate labor supply of a balanced budget change in wage taxation is analyzed section iv provides an interpretation of several previous analyses of these issues section v contains a summary of our results ii the model consider an economy with n identical consumers who derive utility from leisure l a pure private good x which serves as numeraire and a publicly provided good z the utility function u l x z is assumed to be twice continuously differentiable and strictly quasi concave everyone is endowed with t units of time which are allocated either to labor market work or leisure nonmarket activities the marginal product of labor in producing the private good is the constant real gross of tax wage rate w because agents are identical we can confine attention to allocations of equal consumption as a consequence the production possibilities frontier assumed to be linear can be expressed in per capita terms as wl x p n z wt 1 where p is the constant marginal cost of z with identical agents and only two goods not publicly provided it may be assumed without loss of generality that public spending is financed by a wage tax with constant marginal and average ad valorem rate t

who should abate carbon emissions an international viewpoint abstract we review the optimal pattern of carbon emission abatements across countries in a simple multi country world we model explicitly with the model in chichilnisky 1993b the fact that the atmosphere is a public good within this framework we establish conditions for it to be necessary for optimality that the marginal cost of abatement be the same in all countries these conditions are quite restrictive and amount to either ignoring distributional issues between countries or operating within a framework within which lump sum transfers can be made between countries these results have implications for the use of tradeable emission permits which as normally advocated will lead to the equalization of marginal abatement costs across countries the observation that the atmosphere is a public good implies that we may need to look at a lindahl equilibrium rather than a walrasian equilibrium in tradeable permits

multilateral transfers export taxation and asymmetry abstract it has been established that under free trade transfers that are proportional to the trade volumes of recipient nations cannot immiserize them we investigate this result in the context of a three country model of export taxation by recipient nations proportional transfers can be immiserizing in the presence of fixed export taxes under nash welfare maximizing export taxes proportional transfers cannot immiserize the recipients consequences of asymmetry in size and in nash equilibrium tax rates are also explored the findings are relevant for developing nations who use export taxes and also receive foreign aid

on the tying of aid to tariff reform this paper considers the welfare effects of foreign aid that is tied to changes in the recipient s tariff by constructing a three country model with tariffs and by allowing for changes both in the amount of aid and in the tariff rates we are able to consider the welfare implications of two different rules of aid conditionality i a rule which leaves the donor s welfare unchanged and ii a rule which leaves the recipient government s total revenue unchanged it is shown that the tying of aid to a tariff reform can inter alia be used to ensure pareto improvement

organic price premium or penalty a comparative market analysis of organic wines from tuscany abstract previous literature suggests that the price of wine is a function of its intrinsic and extrinsic attributes studies have examined the price of wines from various wine producing regions using the hedonic price model to determine the correlation between wine attributes and price however few studies have examined the relationship between organic production or certification and price this study uses a hedonic pricing model to examine the price premiums associated with organic production and organic certification for tuscan red wines produced between 2000 and 2008 in both the italian and american wine markets controlling for a variety of wine attributes the analysis finds that wines produced with organic practices but not certified as organic and wines certified but not labeled as organic receive a higher price compared to conventional wine for wines with low quality ratings however as the wine s quality rating increases the positive effects of organic practices and certification on price decrease and for wine with higher quality ratings organic practices and certification is associated with lower prices relative to otherwise comparable conventional wines

paradoxes associated with the administration of foreign aid abstract this paper shows that if because of administration costs or other wastes only a proportion of an aid reaches the recipient then it is possible that the donor is enriched by its act of charity the extent of the enrichment increasing with the extent of the leakage and or that the recipient is impoverished by aid the extent of the impoverishment increasing with the extent of the leakage these outcomes are possible even when trade is optimally restricted by donor or recipient

aid nontraded goods and the transfer paradox in small countries this paper constructs a model of the transfer paradox for a small open economy with nontraded goods it demonstrates that increased production of nontraded goods can change their domestic price so as to offset the otherwise beneficial effect of aid and under certain conditions to create a transfer paradox even in a small country the model is estimated with time series data for 44 aid dependent countries for the period 1970 90 the results support the model and show that the nontraded goods expansion effect is more likely to cause immiserization than harry g johnson s 1967 tariff distorting export displacement effect

tied aid and the paradoxes of donor enrichment and recipient impoverishment it is part of received doctrine that in a two country world without hindrance of commodity taxes or other distortions and with market stability assured international transfers necessarily harm the donor and benefit the recipient 2 however in the case of most non private international aid those conditions fail donors often require that aid be spent in a manner not closely related to private preferences in the recipient countries indeed not closely related to any well behaved preferences and they normally finance the aid by means of distorting taxation hence one cannot rule out by appeal to standard theorems the possibility that aid perversely leaves the donor better off and or the recipient worse off let us say that aid is tied in the recipient if it is spent inefficiently in terms of individual preferences and that aid is tied in the donor if it is financed inefficiently thus whether aid is tied is a question of how it is spent or financed it is not a question of the numeraire in terms of which aid is accounted nor of the form in which it is offered 3 evidently the definition of tying is uncommonly broad for example aid may be tied in the recipient not because the donor attaches strings but because the government of the recipient is incompetent or unrepresentative moreover the definition is relevant however the aid is applied whether to private or public goods whether to consumption or investment goods we follow the literature on the transfer problem in assuming that aid is spent on private consumption goods like hospital services and powdered milk this is a matter of convenience and continuity only 4 in the present note we seek to rework the economics of foreign aid under novel assumptions in particular allowance will be made for the possibility that aid is tied in whole or in part in the donor or in the recipient it will be verified that the donor may benefit and the recipient suffer and that these outcomes are com

equilibrium and optimality some imprints of david gale abstract the paper is a review of some of the themes to which david gale made lasting contributions it touches upon a number of the fundamental issues in the walrasian equilibrium theory existence uniqueness and stability the overlapping generations model non optimality and indeterminacy of competitive equilibria the von neumann equilibrium as a turnpike and in the theory of decentralized intertemporal allocation through competitive prices efficiency and golden rules duality and existence of optimal programs

adaptation for mitigation this paper develops a two region north and south dynamic model in which regional stocks of effective labor are negatively influenced by the global stock of pollution by characterizing the equilibrium strategy of each region we show that the regions best responses can be strategic complements through a dynamic complementarity effect the model is then used to analyze the impact of adaptation assistance from north to south it is shown that north s unilateral assistance to south thus enhancing south s adaptation capacity can facilitate pollution mitigation in both regions especially when the assistance is targeted at labor protection pollution might increase in the short run but in the long run the level of pollution will decline the adaptation assistance we propose is incentive compatible and pareto improving

the welfare effects of targeted export subsidies a general equilibrium approach a three country model of export subsidies is developed with an exporter an importer and a neutral country which can act on either side of the market when the neutral country is an exporter the country offering a targeted export subsidy always suffers a welfare loss however when the neutral country is an importer the possibility of a paradoxical result that the subsidizing country can gain and the subsidized country can lose is shown to exist and the conditions under which this result occurs are derived the model fails to provide justification on national welfare grounds for widespread use of targeted export subsidies such as the export enhancement program

labor supply taxes and government spending a microeconometric analysis the effect of government spending on labor supply behavior is critical to predicting the balanced budget effect of income taxes and to estimating the marginal social cost of public funds yet its very existence not to mention direction and magnitude has not been empirically investigated this research estimates a labor supply function that incorporates income taxation and government spending using microeconomic data for men and women the empirical results suggest that public sector spending may have a significant effect on labor supply thereby leading to estimates of the marginal social cost of public funds that differ from those typically calculated

targeted export subsidies as an exercise of monopoly power a country with monopoly power in its export good normally benefits from an export tax however if it exports to two countries and the tax on exports to one is suboptimal then it may be best to subsidize exports to the other this is more likely the smaller is the import demand elasticity in the country being taxed suboptimally and the larger the elasticity in the other it is also more likely the larger are exports to the first and the smaller are exports to the other finally it is more likely the less elastic is home export supply

the generalized theory of transfers and welfare exogenous policy imposed and endogenous transfer induced distortion this paper reconsiders the welfare effects of a transfer payment in a two commodity world with two agents countries by taking the presence of exogenous and endogenous distortions into account when there is an exogenous tax cumsubsidy on production consumption or trade the analysis demonstrates that a transfer may paradoxically enrich the donor and immiserize the recipient under certain specific conditions these welfare paradoxes are also shown to be possible if the transfer endogenously induces directly unproductive profit seeking activity of lobbyists concluding remarks emphasize the paper s relevance for policymakers

welfare effects of aid under quantitative trade restrictions the paper examines the effects of tied aid on the welfare of both the donor and the recipient countries we depart from the previous literature by assuming preexistence of quantitative trade distortions to mitigate these distortions the donor country provides aid that is tied to the rationed good conditions for the presence of the transfer paradox and of the enrichment of both countries are derived and interpreted under the stability of the system furthermore we show that whereas untied aid cannot increase global welfare tied aid unambiguously does so

climate change environmental and technology policies in a strategic context there are a number of features of climate change which make it one of the most challenging problems confronting policy makers and policy analysts in this paper we consider three such features i climate change is a global pollutant so there are strategic interactions between governments over climate policy ii cutting greenhouse gas emissions can have significant cost effects across a number of sectors of the economy raising concerns about the implications of climate change policy on competitive advantage iii the long time scales on which climate change operates means that an important dimension of climate change policy is policy towards r d to cut the costs of dealing with climate change in ulph and ulph 1996 ulph a ulph d 1996 in carraro c katsoulacos y xepapadeas a eds environmental policy and market structure kluwer dordrecht pp 181 208 we presented a model to analyse these issues but considered only environmental policies in this paper we extend that analysis to allow for both a richer set of policy instruments environmental and technology policies and a richer strategic context

foreign aid and public goods abstract most less developed countries ldcs use foreign economic aid to finance public consumption goods or public intermediate inputs this paper constructs a two country general equilibrium trade model where an income transfer that takes place between the two countries is used by the recipient to finance a public consumption good within this framework the paper identifies the conditions under which the income transfer improves or deteriorates the donor country s terms of trade and shows that the transfer can be welfare enriching for the donor and welfare immiserizing for the recipient country the paper also demonstrates that the transfer can raise reduce world welfare in which case a welfare increase decrease in both the donor and the recipient country is possible

impure public goods and transfers in a three agent model abstract this paper extends previous models of non cooperative private funding of pure public goods by allowing for impure public goods the analysis is developed in the context of international public goods under certain conditions the consequences of transfers on utility are paradoxical if the preferences are divergent a country may gain by giving a transfer the receiver may lose and these two phenomena may appear at the same time

transfers returns to scale tied aid and monopolistic competition we examine transfers and tied aid in a model with increasing returns to scale and monopolistic competition transfers give rise to an additional love of variety welfare effect and affect the utility possibility locus generic tied aid may exacerbate or reverse these results the popularity of aid tied to specific manufactured goods can be explained through rent seeking behavior since such aid gives rise to profits in the donor country these profits in turn largely repatriate the transfer such that donors can appear to be more generous than they really are

climate treaties and breakthrough technologies an effective climate change treaty must promote the joint supply of two global public goods climate change mitigation and knowledge of new technologies that can lower mitigation costs r d is especially needed to bring about substantial long term reductions in atmospheric concentrations of greenhouse gases for this will require the development and diffusion of revolutionary breakthrough technologies martin i hoffert et al 2002 in principle such an outcome could be realized by the kyoto protocol approach if that agreement were strengthened over time however that response may be inadequate kyoto makes no provision for r d and as i shall demonstrate unlikely to succeed can a treaty system relying directly on targeted r d and the adoption of breakthrough technologies perform better in this same setting of anarchic international relations i will show that as a general rule the answer is no essentially the same forces that undermine kyoto also challenge the r d and technology approach there is one exception to this rule r d leading to breakthrough technologies exhibiting increasing returns can improve dramatically on the kyoto approach even when these technologies are otherwise inferior to the alternatives available this suggests that our approach to treaty design should be strategic

trade spatial separation and the environment we develop a simple two sector dynamic model to show how pollution can provide a motive for trade by spatially separating incompatible industries we assume that the production of smokestack manufactures generates pollution which lowers the prod uctivity of an environmentally sensitive sector farming two identical unregulated countries will gain from trade if the share of world income spent on smokestack goods is high in contrast when the share of world income spent on the dirty good is low trade can usher in a negatively reinforcing process of environmental degradation and real income loss for the exporter of smokestack goods 1999 elsevier science b v all rights reserved

bilateral war in a multilateral world carrots and sticks for conflict resolution this paper constructs a three country many good and many factor trade theoretic model in which two of the countries are in conflict and where war eort is determined endogenously

putting their money where their mouths are consumer willingness to pay for multi ingredient processed organic food products in response to dramatically increasing adoption in consumer markets the national organic program nop initiated novel labeling standards for food products in the us in 2002 this program is a particularly relevant standardization effort for multi ingredient processed foods rather than a simple binary message organic or not gradations of organic content are now codified no existing published study evaluates consumer willingness to pay or motivation to purchase in response to such a rich organic label this article presents evidence of the impact of the nop through analysis of data collected in seven central ohio usa grocery stores results suggest that consumers are willing to pay premium prices for organic foods even those with less than 100 organic ingredients the magnitudes of wtp premia varied significantly among consumer groups suggesting that targeted marketing may be effective for organic merchandisers

immiserizing transfer under variable returns to scale this paper examines the welfare consequences of a unilateral transfer for both the transfer paying and the transfer receiving country in which the production functions are subject to variable returns to scale we obtain the conditions for the strong paradox that is the welfare of the transfer paying country improves and that of the transfer receiving country declines in the standard two country framework the conditions for the weak paradox that is both the transferor and transferee gain or lose simultaneously and the normal results that is the transferor loses and the transferee gains are also derived transferts appauvrissants quand les rendements a l echelle sont variables ce memoire examine les effets de bien etre d un transfert unilateral a la fois pour le pays donateur et le pays recipiendaire quand les fonctions de production ont des rendements variables a l echelle les auteurs d6veloppent les conditions qui sous tendent le paradoxe fort i e le cas oii le bien r ils d6rivent aussi les conditions qui sous tendent le paradoxe faible i e le cas oui les deux pays gagnent ou

do multinationals deteriorate developing countries export prices the impact of fdi on net barter terms of trade this paper explores the economic relationship between foreign direct investment fdi to developing countries and the export prices of the latter measured by terms of trade it is rst shown that economic theory suggests such a relationship for various reasons but is inconclusive about the direction of the eect to address this open issue empirically i analyze data on more than 50 developing countries throughout the period 1980 2008 using robust dynamic panel data methods the results show that fdi had an economically relevant and statistically signicant positive impact on developing countries net barter terms of trade a higher level of education in the developing country fosters this eect

who supports global economic engagement the sources of preferences in american foreign economic policy in this article we bring together opposing international relations theories to better understand u s foreign policy in particular foreign trade and aid using votes in the u s house of representatives from 1979 2004 we explore different theoretical predictions about preferences for foreign economic policy we assess the impact of domestic factors namely political economy and ideological preferences versus foreign policy pressures our three main results highlight the differential effect of these factors in the two issue areas first aid preferences are as affected by domestic political economy factors as are trade preferences second trade preferences but not economic aid ones are shaped by the president s foreign policy concerns for economic aid domestic political economy factors matter more than foreign policy ones third aid preferences are shaped more by ideological factors than are trade ones but ideology plays a different substantive role in each different constituencies support aid and trade this finding has implications for foreign policy substitutability the internationalist coalition in u s foreign policy statist theories of foreign policy and the connection between public opinion and legislative voting

international redistribution of income summary how do international policies on aid trade and factor movements affect the international distribution of income we calculate the impact by world decile of the actual level of aid flows and the effect on income of merchandise trade restrictions by high income countries we find that aid s distributional impact is equality enhancing extremely small in terms of changes in inequality measures but of some importance for the lowest decile of the distribution we also find that some of this impact is counteracted by lost potential income in the lower deciles from merchandise trade barriers imposed by high income countries

transfers the terms of trade and capital accumulation in the context of a two sector overlapping generations model it is demonstrated that a steady state transfer paradox may arise under commodity trade with stability and without distortions or bystanders the existence of the paradox is due to the effect of the transfer on world capital accumulation which is shown to always i e for any ranking of factor intensities and savings rates improve the donor s terms of trade transfers may also improve steady state welfare for both donor and recipient and produce paradoxical welfare results along the transition path la litterature en statique du commerce international a conclu que en l absence de distorsions ou de tierces parties les mouvements des termes d echange induits par les transferts ne peuvent pas etre suffisamment importants quand il y a stabilite walrasienne pour engendrer le paradoxe du transfert on a tire la conclusion de modeles dynamiques a un secteur que le paradoxe du transfert est possible mais en comptant sur la mobilite internationale du capital et sur les mouvements dans le niveau mondial du taux d interet plutot que sur les prix et les marches des biens dans un modele dynamique a deux secteurs ou les generations se chevauchent ce qui permet des effets a la fois statiques et intertemporels dans les termes d echange le commerce des biens peut engendrer un paradoxe du transfert en regime permanent quand il y a stabilite walrasienne sans distorsions et tierces parties l existence du paradoxe est attribuable a l effet du transfert sur l accumulation du capital qui toujours pour tout ordre des intensites de facteur et des taux d epargne ameliore les termes d echange du donneur les transferts peuvent aussi ameliorer le bien etre du donneur et du recipiendaire en regime permanent et produire des resultats paradoxaux de bien etre dans le sentier de transition

the incentives for north south transfer of climate mitigation technologies with trade in polluting goods the need to transfer climate mitigation technologies towards the developing world has been acknowledged since the beginning of climate negotiations little progress has however been made as shown by article 10 of the paris agreement one reason is that these technologies could become vital assets to compete on global markets this paper presents a partial equilibrium model with two regions the north and the south and imperfect competition in the international polluting goods market to analyze the north s incentives to accept technology transfer results crucially depend on the existence of environmental cooperation when both northern and southern governments set emission quotas non cooperatively inducing fewer global emissions is a necessary but not sufficient condition for the north to accept the transfer in contrast when governments set quotas cooperatively the north has no incentive to share its technology either before or after the agreement technology transfer commitments may be included in the agreement but with no effect on global emissions and global surplus the only impacts are distributional technology transfers and side payments may be substitute instruments

effects of technology transfers on the provision of public goods in this paper we examine the viability ofcooperative policies oriented to the resolution oftransboundary pollution problems using the theory ofprivate provision of public goods in a two countrymodel we analyze the effects on economic welfare ofvoluntary technological transfers oriented to reducingthe emission of pollutants

global imbalances revisited the transfer problem and transport costs in monopolistic competition we study the welfare eects of trade imbalances in a two sector model of monop olistic competition as in perfect competition a trade surplus involves an income transfer to the de cit country and possibly a terms of trade deterioration unlike the conventional wisdom however trade imbalances do not impose any double burden on surplus countries this is because of a production delocation eect which leads to a reduction in the local price index in the presence of intermediate goods new results arise a trade surplus may lead to an appreciation of the exchange rate to a terms of trade improvement and to a welfare increase under standard parameter con gurations in addition policies that stabilize the exchange rate can make the balanced trade equilibrium unstable these results can explain why the manufac turing sector may agglomerate in countries that resist the real appreciation of their currency and suggest that a xed exchange rate and nominal rigidities may generate short run instability

effects of label information on consumer willingness to pay for food attributes choice experiments ces are often used to elicit consumer willingness to pay wtp for food attributes a concern about these approaches is that food attributes provided to respondents are assumed independent of attributes not provided we use surveys containing a series of ces to investigate effects of adding beef steak attributes wtp for important attributes in the ces decrease when the number of attributes increases from three to four while wtp increases when the number of attributes increases from four to five changes in wtp for attributes depend on their relationships with newly added attributes and the number of attributes presented copyright 2007 oxford university press

immiserizing transfers from abroad abstract this paper shows that an international transfer payment may paradoxically immiserize the recipient country or increase the donor country s welfare even when world markets are stable despite the traditional view that such a paradox theoretically requires market instability to demonstrate this paradoxical possibility the paper extends the conventional trade theoretic analysis to admit exogenous distortions created by tax cum subsidies in domestic production or endogenous distortions due to additionality requirements imposed by the donor on the recipient this analysis of immiserizing transfers from abroad immediately suggests significant implications for important policy issues including the evaluation of real benefits from foreign aid

negotiating free trade we develop a dynamic bargaining model in which a leading country endogenously decides whether to sequentially negotiate free trade agreements with subsets of countries or engage in simultaneous multilateral bargaining with all countries at once we show how the structure of coalition externalities shapes the choice between sequential and multilateral bargaining and we identify circumstances in which the grand coalition is the equilibrium outcome leading to worldwide free trade a model of international trade is then used to illustrate equilibrium outcomes and how they depend on the structure of trade and protection global free trade is not achieved when the political economy motive for protection is sufficiently large furthermore the model generates both building bloc and stumbling bloc effects of preferential trade agreements in particular we describe an equilibrium in which global free trade is attained only when preferential trade agreements are permitted to form a building bloc effect and an equilibrium in which global free trade is attained only when preferential trade agreements are forbidden a stumbling bloc effect the analysis identifies conditions under which each of these outcomes emerges

the incredible economics of geoengineering the focus of climate policy so far has been on reducing the accumulation of greenhouse gases that approach however requires broad international cooperation and being expensive has been hindered by free riding so far little action has been taken an alternative approach is to counteract climate change by reducing the amount of solar radiation that strikes the earth geoengineering in contrast to emission reductions this approach is inexpensive and can be undertaken by a single country unilaterally but geoengineering also has worrying consequences it may harm some countries it would not address ocean acidification it would pose new risks the fundamental challenge posed by this new technology is not free riding but governance who should decide if and under what circumstances geoengineering should be used

measuring the relative importance of preferences for country of origin in china france niger and the united states recent labeling policies in developed countries place new focus on origin labeling especially country of origin labeling for a variety of food products it is not clear if this new emphasis on origin is the result of more ethnocentric consumer preferences for food we measure consumer preferences for country of origin in four different international locations and one domestic control location using a conjoint experiment to test the null hypotheses that consumers do not have stronger own country preferences in addition we compare the relative importance of consumer preferences for origin to their preferences for genetically modified food and pesticide free production using attribute coefficients from within location ordered probit models the study was conducted in china france niger and the united states we find consumers tend to prefer food from their own location indicating ethnocentric tendencies do play a role in shaping country of origin preferences country of origin is generally less important to consumers than genetically modified food content and pesticide use in food production