production lot sizing and carbon emissions under cap and trade and carbon tax regulations cap and trade and carbon tax are two emission regulations widely used to curb the carbon emissions generated from firms based on economic order quantity eoq model this paper examines the production lot sizing issues of a firm under these two regulations respectively the optimal lot size and emissions under the two regulations are achieved we then investigate the impacts of production and regulation parameters on the optimal lot size and emissions furthermore we compare the firm s optimal carbon emissions under the two regulations it is found that under the cap and trade regulation the firm s decisions of the optimal emissions as well as permits trading depend on the differentiated permits trading prices if setup incurs the same cost as holding incurs per unit of generated emissions both regulations always lead to the same optimal emissions which is also equal to that without emission regulation otherwise neither regulation always leads to lower emissions than the other does

optimal commercial policy with quality differentiated products abstract this paper examines the optimal tariff policy for an importer of a quality differentiated product when tariff levels are allowed to vary with the quality of the good the deadweight loss due to changes in the matching of consumers to goods under tariffs is emphasized it is shown that if the objective is to transfer income to products there is a presumption that the optimal policy will require consumers to choose lower quality goods than under free trade quality downgrading if all qualities are improved an ad valorem tariff cannot be the optimal policy

optimal production and carbon emission reduction level under cap and trade and low carbon subsidy policies abstract in recent years massive carbon emissions have caused serious global environmental damage such as a worsening greenhouse effect and thick haze to curb carbon emissions as well as maintain sustainable economic development governments promote the development of low carbon economy by issuing multiple policies among which the cap and trade policy ctp and low carbon subsidy policy lcsp are widely adopted moreover manufacturers are increasingly adopting carbon emission reduction technology to produce greener products considering related government policies and rising environmental awareness among consumers to give policy making insights to governments as well as production and carbon emission reduction decision making insights to manufacturers this paper investigates the impacts of ctp and lcsp on the production and carbon emission reduction level of a manufacturer and explores which policy is better for society the results show that the carbon emission reduction level increases as the carbon trading price increases whereas it is independent of the unit low carbon subsidy interestingly the carbon trading price does not always have a negative effect on the manufacturer s profit and the cap does not always produce a positive effect on the manufacturer s profit more importantly we find that lcsp is more beneficial to society when the environmental damage coefficient is less than a threshold but otherwise ctp is more beneficial

combining carbon tax and r d subsidy for climate change mitigation abstract r d industry is introduced into a cge model kei linkages as a means to mimic the endogenous technological progress in the korean economy we found that providing across the board subsidy on r d expenditure may lead to an increase in the carbon intensity as well as the real gdp for the korean economy however when r d subsidies are combined with a carbon tax real gdp can grow without increasing co 2 emissions carbon tax on top of r d subsidy represses the growth of carbon intensive industries compared to the case of stand alone r d subsidy policy furthermore carbon intensive industries reduce carbon intensity by way of fuel mix change to cope with a higher carbon tax rate to meet the national co 2 reduction target the final outcome impinges on the industry structure of the economy therefore a careful study of the industry structure of the economy is warranted to maximize the effectiveness of climate change policy mix

production and transportation outsourcing decisions in the supply chain under single and multiple carbon policies abstract cap and trade and carbon tax are the two main policies to reduce carbon emissions different from the previous literature and practice this paper examines the production and transportation outsourcing problems of a two echelon supply chain under the cap and trade policy and joint cap and trade and carbon tax policy enterprise operations are divided into the order stage and transportation outsourcing decision stage in the order stage the retailer sets his order schedule for the manufacturing plant for fulfillment and in the transportation outsourcing decision stage the manufacturer decides the optimal freight volume based on energy consumption furthermore we construct a basic model without a carbon policy and two extended models with carbon policies and the optimal solutions of the models are solved numerical examples are provided and the three models are compared the results indicate that the extended model with carbon policies is more beneficial for emissions reduction and the effect of emissions reduction gradually becomes smooth as the carbon price increases the joint cap and trade and carbon tax policy is more effective for emissions reduction especially when the carbon price is lower these findings will be helpful to policy makers and managers

the growth of exhaustion management plans policies and decisions must fit the given stage of societal evolution a good policy e g at a time of innovation in a kondratiev or hegemonic cycle structure may be a counterintuitively bad and dangerous policy at a time of saturation and exhaustion of ideas the nature of the kondratiev and hegemonic cycles structures is further examined from the perspective of the life cycle of collective intelligence and knowledge effective intelligence and knowledge are themselves considered to be evolving macrostructures a view much different from both the shannon weaver and computer science perspectives but a view much more consonant with modern dynamic systems theory some untoward experiences with the use of models in energy management during the falling leg of kondratiev number four are noted the origin and exhaustion of contemporary problemsolving approaches are discussed from a theoretical perspective and some thoughts on a possible fifth kondratiev recovery given in conclusion the main theory is synopsized and some brief recommendations made for further thinking about operational research modeling

evolutionary theories in environmental and resource economics approaches and applications recent advances in evolutionary theory have important implications for environmental economics a short overview is offered of evolutionarythinking in economics subsequently major concepts and approaches inevolutionary biology and evolutionary economics are presented andcompared attention is devoted among others to darwinian selection punctuated equilibrium sorting mechanisms lamarckian evolution coevolution and self organization basic features of evolution such assustained change irreversible change unpredictability qualitativechange and disequilibrium are examined it is argued that there are anumber of fundamental differences as well as similarities betweenbiological and economic evolution next some general implications ofevolutionary thinking for environmental economics are outlined this isfollowed by a more detailed examination of potential uses ofevolutionary theories in specific areas of environmental economics including sustainability and long run development theories technologyand environment ecosystem management and resilience spatial evolutionand environmental processes and design of environmental policy

a new assessment model of social cost of carbon and its situation analysis in china abstract the social cost of carbon scc represents monetary value of the damage caused by carbon dioxide emissions in climate change it is an important standard for the formulation of climate policy the uncertainty of carbon social cost is closely related to climate sensitivity damage parameters discount rate and so on previous studies have mainly focused on the consequences of climate change and the effect of social cost of carbon and welfare under different policies its research on the social cost of carbon has not included the evolution coefficient of carbon emissions and it has rarely introduced the climate disaster damage function into the process of solving the social cost of carbon this paper provides a simplified formula for the social cost of carbon the model has a nonlinear processing of the carbon circulation system which increases the nonlinear structure of co2 emission potential in addition the model modifies the climate damage function which adds additional losses from climate catastrophes this paper analyzes the combined effects of several key sensitivity parameters resulting in a fat tail distribution of social cost of carbon ultimately it is found that the mean scc of 2015 is 44 93 tco2 and the median scc is 15 9054 tco2 considering the possibility of extreme results and the impact of disaster risk loss on uncertain structure the joint effects of damage parameters climate sensitive parameters and discount rates make the social cost of carbon as much as 2 8 times the median and fat tail effect is obvious this brings uncertainty to the current emission reduction policies and abatement costs making it more difficult to assess cost effectiveness at last the paper evaluates the social cost of carbon under the base situation and low discount rate in china

estimates of energy subsidies in china and impact of energy subsidy reform abstract for a transitional economy such as china some energy subsidies are reasonable and sometimes even necessary for achieving social goals however with rising energy prices and environmental concerns we see conflicts emerging between energy subsidies energy demand supply fundamentals and climate change considerations energy subsidies have important implications for sustainable development through their effects on energy use efficiency and the choice of fuel source this paper applies the price gap approach to estimate china s energy subsidies results indicate that china s energy subsidies amounted to cny 356 73 billion in 2007 equivalent to 1 43 of gdp subsidies for oil products consumption are the largest followed by subsidies for the electricity and coal sectors furthermore a cge model is used to analyze the economic impacts of energy subsidy reforms our findings show that removing energy subsidies will result in a significant fall in energy demand and emissions but will have negative impacts on macroeconomic variables we conclude that offsetting policies could be adopted such that certain shares of these subsidies are reallocated to support other sustainable development measures which could lead to reducing energy intensity and favoring the environment

discriminating monopoly and international trade the theory of discriminating monopoly although well developed along partial equilibrium lines has been neglected in the pure theory of international trade in this paper we examine the effects of a domestic monopolist engaging in price discrimination between national markets in the context of a general equilibrium framework first we compare a competitive trade equilibrium with a trade equilibrium characterised by the presence of a simple domestic monopolist we then compare this latter equilibrium with the various possible equilibria that can arise when the monopolist is given the opportunity to engage in international price discrimination in contrast to other studies which have explored in general equilibrium systems the impact of monopoly on trade flows we examine income distributional effects that result from the presence of monopoly welfare effects are also considered our model is a standard 2 x 2 x 2 trade model with however two additional restrictions that is we assume two economies each of which is capable of producing two commodities directly with two factors under constant returns although total factor supplies are insensitive to changes in remuneration factors do move frictionlessly between industries in a given economy in response to higher returns we also impose the following two restrictions on the model first we assume that individuals in the home economy including the monopolist have identical and homogeneous utility functions second individuals in the home economy other than the monopolist who is assumed not to possess quantities of either factor possess identical endowments of both factors the former assumption permits us to draw a community indifference map for the home economy that is independent of the distribution of income and also to make comparisons between the equilibria that result from different market structures 2 the latter assumption enables us to discern the corresponding changes in the real incomes of the factor owners since we assume throughout the analysis that perfect competition prevails in the foreign economy the above restrictions on utility functions and factor ownership need not apply to it we merely require here that for whatever

joint production and pricing decisions for multiple products with cap and trade and carbon tax regulations abstract cap and trade and carbon tax regulations are the two main low carbon policies to curb carbon emissions this paper studies the joint production and pricing problem of a manufacturing firm with multiple products under cap and trade and carbon tax regulations and compares the effects of the two regulations on the total carbon emissions the firm s profit and social welfare the firm faces price sensitive demands and the demands for these products are independent firstly we find that the optimal number of products to be produced under cap and trade regulation carbon tax regulation is determined by the emission trading prices and the cap tax rate secondly we detect that the optimal cap tax rate is decreasing increasing or constant in the environmental damage coefficient finally we discover that the social welfare under carbon tax regulation is not less than that under cap and trade regulation although there is neither one regulation always inducing more profit and having advantages in curbing carbon emissions than the other one

tracking global carbon revenues a survey of carbon taxes versus cap and trade in the real world abstract we investigate the current use of public revenues which are generated through both carbon taxes and cap and trade systems more than 28 3 billion in government carbon revenues are currently collected each year in 40 countries and another 16 states or provinces around the world of those revenues 27 7 8 billion are used to subsidize green spending in energy efficiency or renewable energy 26 7 4 billion go toward state general funds and 36 10 1 billion are returned to corporate or individual taxpayers through paired tax cuts or direct rebates cap and trade systems 6 57 billion in total public revenue earmark a larger share of revenues for green spending 70 while carbon tax systems 21 7 billion more commonly refund revenues or otherwise direct them towards government general funds 72 of revenues drawing from an empirical dataset we also identify various trends in systems use of carbon revenues in terms of the total revenues collected annually per capita in each jurisdiction and offer commensurate qualitative observations on carbon policy design choices

low carbon production with low carbon premium in cap and trade regulation abstract manufacturers face a choice of whether to reduce their carbon emissions through employing low carbon technologies though many carbon regulations are set up to curb carbon emissions some firms choose not to take low carbon production because the additional cost of low carbon progressing is high however low carbon production would be a better alternative when we consider consumer s low carbon premium in the cap and trade system in this work we solve the manufacturer s multi product joint pricing and production problem when consumers value the low carbon product higher than the ordinary product our findings provide firms with conditions where low carbon production is profitable furthermore we find that the cap and trade would constrain the total carbon emissions and promote low carbon production simultaneously under certain conditions

welfare ranking ad valorem and specific tariffs under monopolistic competition actual trade and tariff policy prefers ad valorem tariffs to specific tariffs yet in this paper we show that in a setting of monopolistic competition realizing a given restriction on imports via a specific tariff would generate more consumer utility than obtaining the same restriction via an ad valorem tariff jel classification f12 un classement en terme de bien etre des droits de douane ad valorem et specifiques quand on est en regime de concurrence monopolistique les politiques commerciales en vigueur pref rent les droits de douane ad valorem aux droits de douane specifiques or ce memoire montre que dans un contexte de concurrence monopolistique reduire les importations par le truchement d un droit de douane specifique genere plus d utilite pour le consommateur que les memes restrictions obtenues par le truchement d un droit de douane ad valorem

modelling complex human systems a fisheries example abstract the basis of current models used in fishery management is briefly examined and various shortcomings are discussed alternative dynamic models are described which are based on the data available for the nova scotia groundfish fisheries it is shown that human responses can amplify relatively small annual environmental fluctuations leading to large quasi cyclic changes in catch and profit in a detailed spatial model it is shown that stochastic behaviour on the part of some fishermen is necessary for the survival of the fishery and that the efficiency and size of the industry depends very much on the information flows concerning catch a very general discussion is given which shows how these ideas are important in our understanding of innovation and discovery in general terms

the role of co opetition in low carbon manufacturing abstract low carbon manufacturing has become a strategic objective for many developed and developing economies this study examines the role of co opetition in achieving this objective we investigate the pricing and emissions reduction policies for two rival manufacturers with different emission reduction efficiencies under the cap and trade policy we assume that the product demand is price and emission sensitive based on non cooperative and cooperative games the optimal solutions for the two manufacturers are derived in the purely competitive and co opetitive market environments respectively through the discussion and numerical analysis we uncovered that in both pure competition and co opetition models the two manufacturers optimal prices depend on the unit price of carbon emission trading in addition higher emission reduction efficiency leads to lower optimal unit carbon emissions and higher profit in both the pure competition and co petition models interestingly compared to pure competition co opetition will lead to more profit and less total carbon emissions however the improvement in economic and environmental performance is based on higher product prices and unit carbon emissions

optimal production planning with emissions trading emissions trading is a market based mechanism for curbing emissions and it has been implemented in europe north america and several other parts of the world to study its impact on production planning we develop a dynamic production model where a manufacturer produces a single product to satisfy random market demands the manufacturer has access to both a green and a regular production technology of which the former is more costly but yields fewer emissions to comply with the emissions regulations the manufacturer can buy or sell the allowances in each period via forward contracts in an outside market with stochastic trading prices while needing to keep a nonnegative allowance account balance at the end of the planning horizon we first derive several important structural properties of the model and based upon them we characterize the optimal emissions trading and production policies that minimize the manufacturer s expected total discounted cost in particular the optimal emissions trading pol

the impact of demand uncertainty on consumer subsidies for green technology adoption this paper studies government subsidies for green technology adoption while considering the manufacturing industry s response government subsidies offered directly to consumers impact the supplier s production and pricing decisions our analysis expands the current understanding of the price setting newsvendor model incorporating the external influence from the government who is now an additional player in the system we quantify how demand uncertainty impacts the various players government industry and consumers when designing policies we further show that for convex demand functions an increase in demand uncertainty leads to higher production quantities and lower prices resulting in lower profits for the supplier with this in mind one could expect consumer surplus to increase with uncertainty in fact we show that this is not always the case and that the uncertainty impact on consumer surplus depends on the trade off between lower prices and the possibility of underserving customers with h

allowance price drivers in the first phase of the eu ets abstract in the first phase of the eu emissions trading scheme eu ets the price per ton of co 2 initially rose to over 30 the price then collapsed to essentially zero by mid 2007 by deriving a structural model of the allowance price under the assumption of efficient markets i examine the extent to which this variation in price can be explained by marginal abatement costs i then gradually relax the model by allowing for delayed adjustment of price to fundamentals as well as by introducing lagged lhs variables the pattern of results suggests that while prices were not initially driven by marginal abatement costs this inefficiency was largely corrected after the accounting of 2005 emissions in april 2006

trade policy and its impact on quality of imports this paper examines the role of trade policies in influencing a foreign monopolist s decision on price quantity and in particular the quality of its product we show that a specific tariff leads to higher quality whereas an ad valorem tariff usually does the opposite quotas and specific tariffs are shown to be equivalent and both dominate an ad valorem tariff in terms of welfare we also show that subjecting imports to minimum quality requirements hampers national welfare finally we present a comprehensive ranking of all the policy instruments considered in this paper

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

managing carbon footprints in inventory management abstract there is a broad consensus that mankind must reduce carbon emissions to mitigate global warming it is generally accepted that carbon emission trading is one of the most effective market based mechanisms to curb the amount of carbon emissions this paper investigates how firms manage carbon footprints in inventory management under the carbon emission trading mechanism we derive the optimal order quantity and analytically and numerically examine the impacts of carbon trade carbon price and carbon cap on order decisions carbon emissions and total cost we make interesting observations from the numerical examples and provide managerial insights from the analytical results

which policy is more effective carbon reduction in all industries or in high energy consuming industries from dual perspectives of welfare effects and economic effects abstract carbon emission reduction policy is the main method to curb carbon emissions and tackle climate change however few studies have investigated the effectiveness of carbon emission reduction polices from the welfare and economic perspectives this study establishes a dynamic general equilibrium model with input output structure and compares the effects of emission reduction in all industries and in high energy consuming industries the main conclusions are that carbon emission reduction constraints for all industries have more significant negative impacts on consumption and social welfare compared to emission reduction constraints for high energy consuming industries to be more precisely carbon emission reduction in high energy consuming industries has comparative advantages in maintaining social welfare stability regarding economic effects compared with the carbon emission reduction in high energy consuming industries carbon emission reduction in all industries leads to a larger decline in total output and outputs of most industries however the role of carbon emission reduction in all industries is more significant in promoting employment the carbon emission reduction policies of all industries and high energy consuming industries have strengths in economic effects respectively the findings could provide references for the government to take appropriate measures to promote carbon emission reduction and economic growth

retail store density and the cost of greenhouse gas emissions the density size and location of stores in a retailer s network influences both the retailer s and the consumers costs with stores few and far between consumers must travel a long distance to shop whereas shopping trips are shorter with a dense network of stores the layout of the retail supply chain is of interest to retailers who have emission reduction targets and urban planners concerned with sprawl are small local shops preferred over large big box retailers a model of the retail supply chain is presented that includes operating costs such as fuel and rent for floor space as well as a cost for environmental externalities associated with carbon emissions a focus on exclusively minimizing operating costs may substantially increase emissions by 67 in one scenario relative to the minimum level of emissions a price on carbon is an ineffective mechanism for reducing emissions the most attractive option is to improve consumer fuel efficiency doubling the fuel efficiency of cars reduces long run emissions by about one third whereas an improvement in truck fuel efficiency has a marginal impact on total emissions this paper was accepted by yossi aviv operations management

the effects of emission trading on production and inventories in the arrow karlin model abstract the paper deals with the effect of introduction of tradable permits on the production inventory strategy of a firm it is assumed that the firm will minimize its costs the cost function consists of linear holding and convex production costs after introducing emission trading the cost function will contain a linear emission procurement selling cost we will compare the optimal production inventory strategy before tradable permits and thereafter the mathematical investigation is based on the well known dynamic arrow karlin model

evolutionary policies for sustainable development adaptive flexibility and risk minimising abstract an evolutionary perspective on policies to foster sustainable development is presented it is argued that policies suggested by the traditional economic theory of environmental policy can stimulate unsustainable socio economic structures and patterns in addition they are unable to remove undesired locked in systems and technologies drawing on evolutionary thinking characterised by diversity selection innovation path dependence and bounded rationality an alternative partly complementary theory of environmental policy is suggested specific attention is given to the role of strategies that are aimed at increasing diversity and adaptive flexibility and at reducing risk

supply chain coordination with green technology under cap and trade regulation abstract cap and trade regulation is generally accepted as one of the most effective market based mechanisms to curb carbon emissions in this paper we study the production and emission abatement decisions of a make to order supply chain consisting of a manufacturer and a retailer under cap and trade regulation specifically the manufacturer can reduce unit product carbon emission by using green technology with the cooperation of a retailer by certain contracts who sell the products to environment concerned consumers wholesale price and cost sharing contracts are considered in the supply chain we list some main conclusions here first as carbon trading price increases the optimal production quantities the optimal abatement levels firstly decrease increase and then remain constant second both wholesale price and cost sharing contracts can coordinate the supply chain last combining the optimal operational decisions under the two contracts with two part tariff agreement we design a contract in which the retailer pays a lump fee to the manufacturer and find that there is an interval of the lump fee to achieve pareto improvement for the two firms

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

reference dependent electric vehicle production strategy considering subsidies and consumer trade offs abstract in this paper we extend previous reference dependence newsvendor research by incorporating both consumer trade offs and government subsidies to evaluate the relevant influences on the optimal electric vehicle ev production decisions we present the properties of the model derive the closed form solutions for the model given the relevant constraints and use numerical experiments to illustrate the results we find that subsidies loss aversion the performance of both evs and internal combustion engine powered vehicles icevs and the coefficient of variation of demand are significant factors influencing the optimal production quantity and the expected utilities of ev production the high selling price and other high costs of icevs help offset the influence of loss aversion whereas the high costs of ev enhance loss aversion our study enriches the literature on subsidies for evs by establishing a behavioral model to incorporate the decision bias in terms of loss aversion at the firm level these findings provide guiding principles for both policymakers and ev managers for making better strategies to promote evs in the early immature market

tax subsidy policies in the presence of environmentally aware consumers abstract we study policy measures to improve environmental quality in the presence of environmentally aware consumers we consider two sets of policy instruments uniform policies for the firms and policies that discriminate between the firms based on their environmental quality for the latter set either the better performer is rewarded with a subsidy or the worse performer is punished with a tax we find that while a uniform subsidy policy improves average environmental quality a uniform tax policy worsens it further while a discriminatory subsidy policy reduces total pollution and enhances aggregate welfare a discriminatory tax policy may increase total pollution and may reduce aggregate welfare

multi item production planning with carbon cap and trade mechanism abstract carbon emission control becomes a challenge in recent years and carbon emission trading is an effective way to curb carbon emission this paper investigates the multi item production planning problem with carbon cap and trade mechanism in which a firm uses a common capacity and carbon emission quota to produce multiple products for fulfilling independent stochastic demands and the firm can buy or sell the right to emit carbon on a trading market of carbon emission a profit maximization model is proposed to characterize the optimization problem the optimal policy of production and carbon trading decisions is analyzed and an efficient solution method with linear computational complexity is presented for solving the optimal solution the impacts of carbon price carbon cap on the shadow price of the common capacity production decisions carbon emission and the total profit are investigated the comparisons of the carbon cap and trade policy and the taxation policy are given to show the effectiveness of the policies numerical analyses are presented for illustrating our findings and obtaining some managerial insights and policy implication

product differentiation and oligopoly in international markets the case of the u s automobile industry this paper develops and estimates a model of the u s automobile industry on the demand side a discrete choice model is adopted that is estimated using micro data from the consumer expenditure survey the estimation results are used in conjunction with population weights to derive aggregate demand on the supply side the automobile industry is modelled as an oligopoly with product differentiation equilibrium is characterized by the first order conditions of the profit maximizing firms the estimation results are used in counterfactual simulations to investigate two trade policy issues the effects of the ver and exchange rate pass through

trade policy and quality leadership in transition economies trade policy and quality leadership in transition economies are analyzed in a duopoly model of trade and vertical product differentiation we first show that the incidence of trade liberalization is sensitive to whether firms in transition economies are producers of low or high quality second we find that neither free trade nor the absence of a domestic subsidy are optimal both a tariff and a subsidy increase price competition and while the former extracts foreign rents the latter results in quality upgrading third there exists a rationale for a government to commit to a socially optimal policy to induce quality leadership by the domestic firm when cost asymmetries are low finally we establish an equivalence result between the effects of long run exchange rate changes and those of trade policy on price competition but not on social welfare

economies of scale imperfect competition and the pattern of trade it has been long recognised that economies of scale and market structures have significant impacts on a country s comparative advantage and pattern of trade but the assumption of perfect competition used since the classicists has deterred the analysis of these elements in international trade theory this is evidenced by most of the current textbooks on international trade which usually offer a small section or at best a small chapter on imperfect competition and economies of scale in relation to international trade very recently however a handful of works have appeared that have dealt with economies of scale and imperfect competition in a general equilibrium framework in keeping with the modern theory of international trade negishi i972 krugman i979 i980 dixit and norman i980 helpman i981 and ethier forthcoming a brief summary of these contributions can be given as follows negishi is mainly concerned with proving the existence of equilibrium and gains from trade in a world of imperfect competion krugman i979 using the negishian model basically allows for product differentiation a la dixit and stiglitz i977 the very existence of product differentiation in turn allows for intra industry trade and it also implies that there are gains from trade from consuming more varieties of products even between economies which are identical in factor endowments technology and tastes using this model krugman i980 shows a larger domestic market hypothesis of pattern of trade which says that a country tends to be a net exporter of the products which have relatively larger domestic markets the existence of economies of scale is what explains this dixit and norman present three models of imperfect competition in the first one they consider a cournot model with entry in which it is shown that trade leads to a greater equilibrium number of firms and hence more competition and to an increase in welfare in the second model they examine the effect of trade on product selection in a monopoly model their third model appears to be richest among the three it incorporates product differentiation and intra industry trade as in krugman s papers an economy is divided into two sectors a competitive sector and a monopolistically competitive sector and then equilibrium in a trading world economy is characterised two conclusions stand out first as for the inter industry trade the factor abundance hypothesis the heckscher ohlin theorem explains the pattern of trade second as for the intra industry trade a smaller country has comparative advantage in the production of differentiated goods which are produced in the monopolistically

voluntary export restraints profits and quality adjustment this paper develops a model of vertical differentiation to assess the impact of output constraints on the profits and quality choices of firms subject to them a competitive environment is developed with the automobile industry in mind multiproduct oligopolists producing differentiated goods who behave as coumot competitors the results show that an output constraint will not induce constrained firms to upgrade their product line when their unconstrained competitors produce higher quality models it is also shown that an output constraint can raise the profits of constrained firms despite output increases by unconstrained firms