variable returns to scale in production and patterns of specialization this paper discusses some trade and welfare implications of the two sector model based on increasing returns to scale irs in one industry and decreasing returns to scale drs in the other it has been shown by horst herberg and murray kemp that given homothetic production functions with irs in one industry and drs in the other the production possibilities frontier ppf is strictly concave to the origin near the irs axis and strictly convex to the origin near the drs axis while this result constitutes an important finding and is contrary to the general impression among economists even twelve years after the publication of herberg and kemp s paper no attempt has been made to analyze its implications for welfare and patterns of specialization in this paper i consider a simple twocommodity model with irs in one industry and drs in the other and discuss some interesting implications of variable returns to scale vrs first i demonstrate that in this model if a small open economy specializes completely in production it will do so in the drs commodity and not in the irs commodity as is generally believed second if at a given price ratio an internal production equilibrium exists a welfaremaximizing small open economy will never specialize completely in production even though the ppf exhibits decreasing opportunity costs over a part of its range third given output generated economies and diseconomies of scale welfare maximization for a small country requires a permanent tax subsidy scheme encouraging expansion of the irs industry and contraction of the drs industry finally in a two country model with identical tastes and technology across the countries free trade equilibrium may result in incomplete specialization by the exporter of the irs commodity and complete specialization by the exporter of the drs commodity in the course of the analysis i argue that tinbergen s formulation of frank graham s case for protecting the irs industry is incorrect i then present a possible reformulation of it in section i the basic production model is introduced in section ii the model is analyzed and in section iii it is argued that all the results continue to hold in the multifactor case

external economies and international trade redux comment recently in this journal grossman and rossi hansberg 2010 proposed a novel way to think about the implications of international trade in the presence of national external economies at the industry level instead of perfect competition and two industries grh assume bertrand competition and a continuum of industries grh conclude that the equilibrium is unique if transport costs are low that there is no trade for high transport costs and that there is no equilibrium in pure strategies when transport costs are intermediate in this note we reexamine the equilibrium analysis

taxation and international migration of superstars evidence from the european football market we analyze the effects of top tax rates on international migration of football players in 14 european countries since 1985 both country case studies and multinomial regressions show evidence of strong mobility responses to tax rates with an elasticity of the number of foreign domestic players to the net of tax rate around one around 0 15 we also find evidence of sorting effects low taxes attract highability players who displace low ability players and displacement effects low taxes on foreigners displace domestic players those results can be rationalized in a simple model of migration and taxation with rigid labor demand jel f22 h24 h31 j44 j61 l83

fdi and taxation a meta study despite the continuing political interest in the usefulness of tax competition and tax coordination as well as the wealth of theoretical analyses it still remains open whether or when tax competition is harmful moreover the influence of tax differentials on multinationals decisions is still insufficiently analyzed thus economists have increasingly resorted to empirical analysis in order to gain insights on the elasticity of fdi with respect to company taxation as a result the empirical literature on taxation and international capital flows has grown to a similar abundance during the last 25 years as the respective theoretical literature its heterogeneity leads to a rising need for concise reviews on the existing empirical evidence in this paper we extend former meta analyses on fdi and taxation in three ways first we add the most recent publications unconsidered in meta analyses up to date second we apply a different methodology by using a broad set of meta regression estimators and explicitly discuss which one is most suitable for application to our meta data third we address some important issues in research on fdi and taxation to the clarification of which meta analysis can make valuable contributions these issues are mainly the influence of variables which might moderate effects of tax differentials e g public spending the implications of using aggregate fdi data as opposed to firm level information on measured tax effects the implications of bilateral effective tax rates and the possible presence of publication bias in primary research

interconnectivity of communications networks and international trade in this study a multi country model of trade is developed that captures the role of country specific communications network interconnectivity which enhances trade in intermediate business services the number of countries connected to inter nationally interconnected networks is found to determine the structure of comparative advantage that is countries with interconnected networks have a comparative advan tage in the good that requires business services provided via networks in connected countries producers of that good benefit from the efficient transmission of business services this research also demonstrates that countries whose country specific net works are not connected to the interconnected networks may become worse off as the

does a manufacturer benefit from selling to a better forecasting retailer this paper considers a manufacturer selling to a newsvendor retailer that possesses superior demand forecast information we show that the manufacturer s expected profit is convex in the retailer s forecasting accuracy the manufacturer benefits from selling to a better forecasting retailer if and only if the retailer is already a good forecaster if the retailer has poor forecasting capabilities then the manufacturer is hurt as the retailer s forecasting capability improves more generally the manufacturer tends to be hurt benefit by improved retailer forecasting capabilities if the product economics are lucrative poor finally the optimal procurement contract is a quantity discount contract

trade demand spillovers and industrialization the emerging global middle class in perspective in this paper we investigate international demand spillovers brought about by a global middle class and their impact on trade patterns and industrialization we propose a multi industry and two country trade model featuring demand complementarities propagating increasing returns across industries and national boundaries we show how the international extent of demand spillovers depends upon asymmetries in domestic income distribution labor efficiency and labor force size that is on the global distribution of real income

network externalities discrete demand shifts and submarginal cost pricing the introduction of a new product often causes a massive discrete demand shift to the new product this study demonstrates that if a large scale demand shift to a new product is accompanied by network externalities it may result in submarginal cost pricing by which the seller sets its price below the marginal cost this finding casts new light on dumping and safeguard issues in the real world jel classification d42 externalites de reseaux deplacements discrets de la demande et tarification en deca du cout marginal l introduction d un nouveau produit engendre souvent un deplacement massif discret de la demande vers le nouveau produit cette etude montre que si un tel deplacement de la demande est accompagne d externalites de reseaux il peut s ensuivre une tarification en deca du cout marginal ou le vendeur fixe son prix en dessous du cout marginal ce resultat jette une lumiere nouvelle sur les problemes de dumping et de protection dans le monde reel

a gravity model analysis of international migration to north america this study examines the influence of political economic and demographic factors on the size and composition of migration flows to north america a modified gravity model is specified and adjusted to include immigration regulations and characteristics specific to the origin and destination countries for empirical test of the model the time period of study is from 1976 1986 and 70 countries are covered for a total of 1540 observations of migration flows to canada and the usa the results reveal that the population of origin countries and the income of destination countries are two major determinants of migration to north america high population areas of asia and latin america provided a large share of the immigrants domestic restrictions on political and civil freedom in origin countries are found to significantly impair migration to north america

congestible communications networks and international trade we build a two country model of monopolistic competition with communications networks a communications network is characterized by 1 the existence of large fixed costs of network provision and 2 the presence of congestion it is demonstrated that both the size of a country and the relative magnitude of the congestion effect determine its comparative advantage if the congestion effect resp the cost sharing effect prevails universally a comparative advantage in the goods that require communications is held by the smaller resp larger of the two countries jel classification d43 f12 reseaux de communication congestion et commerce international ce memoire presente un modele de concurrence monopolistique a deux pays avec des reseaux de communication un reseau de communication est caracterise par 1 l existence de couts fixes importants pour la mise en place du reseau et 2 la presence de congestion on montre que la taille du pays et la magnitude relative de la congestion determinent l avantage comparatif si l effet de congestion ou respectivement l effet de partage des couts prevaut un avantage comparatif dans les biens qui demandent plus de communication est detenu par le plus grand respectivement le plus petit des deux pays

home or overseas an analysis of sourcing strategies under competition motivated by the recent backshoring trend this paper studies a sourcing game where competing firms may choose between efficient sourcing e g sourcing from overseas and responsive sourcing e g sourcing from a home country efficient sourcing usually provides a cost advantage whereas responsive sourcing allows a firm to obtain more accurate demand information when making procurement decisions by characterizing the equilibrium outcome we find some interesting results driven by the strategic interaction between the firms first a firm may still use efficient sourcing in equilibrium even when the cost advantage associated with efficient sourcing does not exist this is because the firm can dampen competition by reducing the correlation between its own demand information and the competitor s second a cost hike in efficient sourcing e g the rising labor cost in asia may benefit all the firms in the industry the reason is that the cost hike may alleviate competition by inducing a new equilibrium sourcing structure this paper also sheds some light on the recent backshoring trend first our analysis indicates that more firms will shift from efficient sourcing to responsive sourcing in equilibrium i e backshore if the market size shrinks the demand becomes more volatile or the sourcing costs rise simultaneously second a firm s backshoring behavior reduces the competition on the cost dimension but it also has an ambiguous informational impact on the other firms in the market in particular some firms may benefit from increased correlation of their demand information under cournot competition with substitutable products overall the backshoring behavior can be beneficial to all the firms sticking to their original sourcing strategies under certain conditions this paper was accepted by martin lariviere operations management

clusters and comparative advantage implications for industrial policy abstract cases of industrial agglomeration or clusters arise in the presence of industry specific and local externalities also called marshallian externalities the standard argument is that such externalities may justify a policy of infant industry protection to allow and encourage clusters to emerge in this paper i explore this carefully and show that different policy implications emerge under a more realistic modeling of clusters in particular rather than distorting prices to promote clusters in advanced sectors that may exhibit strong clustering possibilities countries should focus instead on promoting clustering in current sectors which have revealed to have the strongest comparative advantage import substitution is not a proper way to achieve this

trade patterns and gains from trade with an intermediate good produced under increasing returns to scale abstract this paper considers a model with one primary factor one intermediate good and two final goods increasing returns to scale are introduced into the production of the intermediate good to analyze trade patterns and gains from trade with two assumptions about the market structure of the intermediate good average cost pricing and monopoly free trade does not necessarily lead to gains for the economy and either specialization or multiple equilibria are obtained this paper also provides interesting comparisons between the types of market structure showing for example that monopoly can be preferred to average cost pricing

on the relationship between entropy demand uncertainty and expected loss abstract we analyze the effect of demand uncertainty as measured by entropy on expected costs in a stochastic inventory model existing models studying demand variability s impact use either stochastic ordering techniques or use variance as a measure of uncertainty due to both axiomatic appeal and recent use of entropy in the operations management literature this paper develops entropy s use as a demand uncertainty measure our key contribution is an insightful proof quantifying how costs are non increasing when entropy is reduced

taxation and the international mobility of inventors we study the eect of top tax rates on superstar inventors international mobility since 1977 using panel data on inventors from the u s and european patent oces we exploit the dierential impact of changes in top tax rates on inventors of dierent qualities superstar inventors location choices are signicantly aected by top tax rates in our preferred specication the elasticity to the net of tax rate of the number of domestic superstar inventors is around 0 03 while that of foreign superstar inventors is around 1 these elasticities are larger for inventors in multinational companies an inventor is less sensitive to taxes in a country if his company performs a higher share of its research there

strategic commitments for an optimal capacity decision under asymmetric forecast information we study the important problem of how to assure credible forecast information sharing between a supplier and a manufacturer the supplier is responsible for acquiring the necessary capacity before receiving an order from the manufacturer who possesses private forecast information for her end product we address how different contracts affect the supplier s capacity decision and hence the profitability of the supplier and the manufacturer we fully develop two contracts and provide explicit formulae to enable credible forecast information sharing the first is a nonlinear capacity reservation contract under which the manufacturer agrees to pay a fee to reserve capacity the second is an advance purchase contract under which the manufacturer is induced to place a firm order before the supplier secures the component capacity used to build the end product these contracts serve a strategic role in information sharing the capacity reservation contract enables the supplier to detect the manufacturer s private forecast information while the advance purchase contract enables the manufacturer to signal her forecast information we show that channel coordination is possible even under asymmetric forecast information by combining the advance purchase contract with an appropriate payback agreement through our structural and numerical results we also show that the degree of forecast information asymmetry and the risk adjusted profit margin are two important drivers that determine supply chain efficiency and which contract to adopt

international outsourcing and factor prices with multistage production we develop a dual representation of the technology of international fragmentation for an industry using 2 factors in a continuum of stages we then derive a generalised factor price frontier which incorporates an endogenous adjustment of the margin of fragmentation using this frontier in a 2 2 general equilibrium model we investigate the role of outsourcing in the adjustment to a decline in the final output price of the multistage industry and the attendant factor price effects we also explore the implications of an improved technology of international fragmentation on the margin of fragmentation and on domestic factor prices

the harris todaro model and economies of scale the authors attempt to reanalyze the harris todaro migration model in the presence of economies of scale in the manufacturing sector focusing on economies of scale that are external to a given firm but internal to the industry annotation

dumping and dynamic competition abstract when the current output level affects future production costs domestic and foreign profit maximizing firms may set prices below current costs to gain experience antidumping enforcement which poses a barrier to below cost sales by foreign rivals changes the payoff structure of competition and alters the equilibrium decisions of both foreign and domestic firms a comparison of the nash equilibria with and without antidumping rules shows that these rules change market outcomes even when they do not appear to be binding ex post this positive analysis of antidumping enforcement complements previous studies that have considered the motivation for dumping

a theoretical explanation of some stylized facts of economic growth this paper presents a three good two country general equilibrium model that is consistent with several stylized facts of economic growth the three goods are manufactures agriculture and services manufactures are subject to economies of scale the model predicts that services a nontraded good must be more expensive in the country with higher per capita income it also shows that as per capita income increases we should expect the productivity in commodities relative to services to rise the model is able to generate many other stylized facts of economic growth

dynamic bargaining in a supply chain with asymmetric demand information we analyze a dynamic bargaining game in which a seller and a buyer negotiate over quantity and payment to trade for a product both firms are impatient and they make alternating offers until an agreement is reached the buyer is privately informed about his type which can be high or low the high type s demand is stochastically larger than the low type s in the dynamic negotiation process the seller can screen whereas the buyer can signal information through their offers and the buyer has an endogenous and type dependent reservation profit with rational assumptions on the seller s belief structure we characterize the perfect bayesian equilibrium of the bargaining game interestingly we find that both quantity distortion and information rent may be avoided depending on the firms relative patience and the seller may reach an agreement with either the high type or the low type first or with both simultaneously furthermore we explore our model to characterize the effect of demand forecasting accuracy on firm profitability we find that improved demand forecast benefits the buyer but hurts the seller when the buyer s forecasting accuracy is low however once the buyer s forecasting accuracy exceeds a threshold both firms will benefit from further improvement of the forecast this observation makes an interesting contrast to previous findings based on the one shot principal agent model in which improvement of forecasting accuracy mostly leads to a win lose outcome for the two firms and the buyer has an incentive to improve his forecasting accuracy only when it is extremely low this paper was accepted by yossi aviv operations management

demand information and spot price information supply chains trading in spot markets abstract this paper investigates the effect of information updating on the members of a two stage supply chain in the presence of spot market the supplier decides the contract price new information becomes available as time progresses the manufacturer updates his belief on demand and or spot price and subsequently decides the contract quantity the demand and spot price are correlated thus the new demand information also updates the belief on the spot price and vice versa we model the problem with an information updating stackelberg game and derive unique equilibrium strategies previous studies have considered only the demand information and concluded that improved demand information always benefits the supplier by contrast we demonstrate that improved demand information benefits both the supplier and manufacturer if the correlation coefficient between the two uncertainties has a small positive value and benefits the manufacturer but hurts the supplier otherwise moreover superior spot price information benefits only the manufacturer and always hurts the supplier surprisingly superior information fails to improve the performance of the supply chain and only changes the allocation of the profits between the supplier and manufacturer our findings likewise provide insights into when the supplier intends to use the contract channel and which type of information updating facility or expertise to invest in if a choice must be made

global models applied to agricultural and trade policies a review and assessment the continuing process of global integration bears implications for farmers and related supplying and processing industries in all parts of the world but also for the rest of the world economy an assessment of agricultural and trade policy impacts is bound to be complex and is often supported by quantitative modeling analysis this article provides an assessment of the present state of applied modelling in the area of trade and agricultural policies we provide in this paper a comparative assessment of alternative modelling approaches considering a total of 16 partial equilibrium and general equilibrium models the assessment includes theoretical modelling foundations datasets employed and institutional aspects such as model maintenance and dissemination of results a typology of models is provided by structuring the assessment along a clear set of evaluation criteria

domino dumping i competitive exporters when exporting firms face the prospect of voluntary export restraints they have an incentive to export more than with no prospect of a voluntary export restraint since greater exports lead to larger license allocations in the event of a voluntary export restraint export country governments incentives differ leading either to export tax or subsidy depending on the circumstances the prospect of one departure from free trade thus leads to another a domino effect antidumping enforcement will ordinarily not eliminate and ironically may increase dumping copyright 1992 by american economic association

peripherality in economic geography and modern growth theory evidence from ireland s adjustment to free trade in light of the ambiguous convergence experience of peripheral regions in the eu and in the post war world economy this paper studies the implications of some recent trend models that do not predict convergence as a necessary outcome of market integration these models are then confronted with data on the irish experience under free trade the irish case is arguably of general interest because it has served as one of the longest running examples of the type of outward oriented strategies recommended for developing countries by international institutions such as world bank and the imf the purpose of the paper is twofold to identify lacunae in the recent theoretical analyses and to develop further insights into the structural transformation of a peripheral economy this abstract was borrowed from another version of this item

home bias in open economy financial macroeconomics standard theory would predict that investors hold a well diversified portfolio of equities across the world but despite the process of financial globalization investors still hold a disproportionate share of local equities in their portfolio the equity home bias french and poterba 1991 we review the various explanations of this puzzling phenomenon in the context of recent developments in macroeconomic modelling that have allowed to incorporate sophisticated international portfolio choices in standard two country general equilibrium models we refer to this literature as open economy financial macroeconomics we focus on three broad classes of explanations i hedging motives in frictionless financial markets real exchange rate and non tradable income risk ii asset trade costs in international financial markets such as transaction costs differences in tax treatments between national and foreign assets iii informational frictions and behavioural biases these recent developments raise the need for new portfolio facts beyond the equity home bias and we will present some new evidence on cross border asset holdings across different types of assets equities bonds and bank lending we also present some new micro data on institutional holdings of equity at the fund level these data should inform macroeconomic modelling of the open economy and a growing literature of models of delegated investment

managerial versus production wages offshoring country size and endowments we explore the role of trade in differentiated final goods as well as offshoring of tasks for inequality both within and between countries emphasizing the distinction between managerial and production labour we extend grossman and rossi hansberg 2012 where task trade is driven by external economies of scale by considering asymmetric endowments identifying possible equilibrium patterns of task trade we find little scope for two way trade if endowments are asymmetric our numerical simulations identify non monotonicities between the level of offshoring and measures of within country as well as between country inequality remunerations des gestionnaires et des travailleurs delocalisation taille du pays et dotation de facteurs on explore le role du commerce de biens differenciees finaux ainsi que celui de la delocalisation des t ches dans l explication de l inegalite a la fois intra et entre pays en mettant l accent sur la distinction entre travail de gestion et travail de production on developpe le modele de grossman et rossi hansberg 2012 ou le deplacement des t ches est enclenche par les economies d echelle externes en considerant les dotations asymetriques de facteurs en identifiant les patterns d equilibres possibles du deplacement des t ches on trouve peu de possibilite pour un commerce bilateral si les dotations sont asymetriques des simulations numeriques identifient des relations non monotones entre le niveau de delocalisation et des mesures d inegalites intra pays ou entre pays

technical note optimal long term supply contracts with asymmetric demand information we consider a manufacturer selling to a retailer with private demand information arising dynamically over an infinite time horizon under a backlogging model we show that the manufacturer s optimal dynamic long term contract takes a simple form in the first period based on her private demand forecast the retailer selects a wholesale price and pays an associated upfront fee and from then on the two parties stick to a simple wholesale price contract with the retailer s chosen price under a lost sales model we show that the structure of the optimal long term contract combines a menu of wholesale pricing contracts with an option that if exercised by the retailer reduces future wholesale prices in exchange for an immediate payment to the manufacturer the online appendix is available at https doi org 10 1287 opre 2017 1626

an empirical analysis of term premiums using significance tests for stochastic dominance abstract the economic significance of term premiums in real returns on us treasury bills is examined using recently developed tests for first and second order stochastic dominance the tests place only general restrictions on the preferences of individuals and on the distribution of returns the results indicate that the two month real return is preferred to the one month real return based on both dominance criteria other term premiums do not appear to be economically significant

international tax coordination regionalism versus globalism tax competition for mobile capital can undermine the attempts of governments to redistribute income from rich to poor i study whether international tax coordination can alleviate this problem using a general equilibrium model synthesizing recent contributions to the tax competition literature the model highlights the crucial distinction between global tax coordination and regional coordination with high capital mobility between the tax union and the rest of the world the welfare gain from regional capital income tax coordination is only a small fraction of the gain from global coordination even if the tax union is large relative to the world economy

reforming an asymmetric union on the virtues of dual tier capital taxation the tax competition for mobile capital in particular the reluctance of small countries to agree on measures of tax coordination has ongoing political and economic fallouts within europe we analyse the effects of introducing a two tier structure of capital taxation where the asymmetric member states of a union choose a common federal tax rate in the first stage and then non cooperatively set local tax rates in the second stage we show that this mechanism effectively reduces competition for mobile capital between the members of the union moreover it distributes the gains across the heterogeneous states in a way that yields a strict pareto improvement over a one tier system of purely local tax choices we also discuss the effects of diverging capital endowments within the union and capital flows to third countries

a supplier s optimal quantity discount policy under asymmetric information in the supply chain literature an increasing body of work studies how suppliers can use incentive schemes such as quantity discounts to influence buyers ordering behaviour thus reducing the supplier s and the total supply chain s costs various functional forms for such incentive schemes have been proposed but a critical assumption always made is that the supplier has full information about the buyer s cost structure we derive the optimal quantity discount policy under asymmetric information and compare it to the situation where the supplier has full information

a note on the neoclassical ambiguity and the specific factor production model under variable returns to scale abstract this note investigates the relationship between commodity price changes and factor rewards in a specific factor production model that admits variable returns to scale the principal result is that in the presence of variable returns to scale the so called neoclassical ambiguity may be resolved without resorting to detailed knowledge of the mobile factor s preferences that is to say the effect of a commodity price change may as it does with the returns to those factors specific to each industry raise or lower the real reward of the mobile factor in terms of either commodity depending only on the characteristics of the technology

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

trade and communication costs two models in which communication costs are a cost to trade are investigated one model looks at the role of communication in determining the firms geographic extent in the use of local factor services communication costs are modelled as a quasi public good network in which communication services are provided by an average cost pricing monopolist the network technology is subject to increasing returns congestion effects and network externalities the second model focuses on communication for the purposes of international trade in goods with similar assumptions on the technology of communication as in the first model in this model an important distinction is made between international equilibrium and global equilibrium in both models the impact of reductions in communication costs on the market extent of firms trade volumes and productivity are examined the models have generic multiple equilibria with quite different welfare and comparative static properties

policy designs in a dynamic model of infant industry protection abstract this paper takes the neoclassical infant industry model allows agents to respond to future expectations and reveals previously unexplained relationships between protection and outcome policy which projects to protect the industry until international competitiveness may not necessarily succeed consistent to the mixed empirical evaluations to guarantee success protection has to last longer however for success to be an equilibrium protection can last shorter decline after take off is also an equilibrium when adjustment speed is bounded increasing the protection rate is not isomorphic to decreasing its duration in policy design adjustment speed critical industry scale and policy duration are all relevant

the economic consequences of corporate tax rates reductions in the eu evidence using a computable general equilibrium model in a globalised world governments are eager to attract foreign investors by lowering corporate tax rates recent trends point towards a revival of a race to the bottom in corporate income tax cit rates in developed economies eu countries have been active in this respect a generalised fall in cit rate could prove detrimental to tax revenues and trigger increase in other taxes to meet fiscal policy objectives however it could also spur investment and growth and prove to be a good fiscal policy strategy if as a result the corporate tax base increases the final economic and fiscal impact of a reduction in cit rates is therefore unclear using a cge model we find that uncoordinated tax reforms significantly impact national economies and third country effects can be significant when large countries implement cit rate cuts small countries are better off unilaterally reducing their cit rate at the expense of other eu countries we find that negative spillovers are mitigated when the country reducing its cit rate restores its budget balance by cutting either public expenditures or social transfers a larger degree of non eu capital mobility also tends to reduce the negative spillover effects of unilateral cit rate reductions

bayesian learning in an infant industry model abstract most analyses of the infant industry argument assume that production early on benefits subsequent production in deterministic fashion this paper presents an alternative framework for evaluating the infant industry argument that focuses on imperfect information as a barrier to entry initial entrants provide information of social value by reducing uncertainty for potential followers about the suitability of local conditions in contrast to earlier work i show that factors that increase the informational barrier to entry may lower the optimal subsidy to the infant industry and that the standard test of the success of infant industry policy is not always valid 1997 elsevier science b v

information sharing in a long term supply chain relationship the role of customer review strategy in this paper we study the practice of forecast sharing and supply chain coordination with a game theoretical model we find that in a one shot version of the game forecasts are not shared truthf

do countries compete over corporate tax rates this paper tests whether oecd countries compete with each other over corporate taxes in order to attract investment we develop two models with firm mobility countries compete only over the statutory tax rate or the effective average tax rate while with capital mobility countries compete only over the effective marginal tax rate we estimate the parameters of reaction functions using data from 21 countries between 1983 99 we find evidence that countries compete over all three measures but particularly over the statutory tax rate and the effective average tax rate this is consistent with a belief amongst governments that location choices by multinational firms are discrete we also find evidence of concave reaction functions consistent with the model outlined in the paper

coalition formation in standard setting alliances we present a theory for predicting how business firms form alliances to develop and sponsor technical standards our basic assumptions are that the utility of a firm for joining a particular standard setting alliance increases with the size of the alliance and decreases with the presence of rivals in the alliance especially close rivals the predicted alliance configurations are simply the nash equilibria i e those sets of alliances for which no single firm has an incentive to switch to another alliance we illustrate our theory by estimating the choices of nine computer companies to join one of two alliances sponsoring competing unix operating system standards in 1988

north south knowledge spillovers and competition convergence versus divergence abstract technology spillovers from high productivity countries in the north allow low productivity countries in the south to improve productivity in high tech sectors relatively easy however the south s share in world goods markets for high tech products is relatively low which reduces opportunities for learning by doing our simple ricardian endogenous growth model shows how the balance between toughness of competition in trade and the strength of north south spillovers determines whether productivity levels diverge partially converge or fully converge in the long run if convergence prevails the north is confronted with declining employment in high tech sectors temporary trade policy measures can turn a diverging economy into a converging one

international trade with a public intermediate good abstract the purpose of this paper is to investigate familiar trade theorems such as the stolper samuelson samuelson rybczynski heckscher ohlin and factor price equalization theorems when a public intermediate good is accommodated in the 2 2 general equilibrium trade model the public good which is introduced by the lindahl pricing rule is assumed to be of a semipublic kind then we present the circumstances where the positive results for all of the above theorems except the factor price equalization theorem hold as for factor price equalization we show that there is a tendency for trade to equalize prices

procompetitive gains from trade and comparative advantage having made the concepts of pro or anticompetitive output changes precise necessary and sufficient conditions for trade gains are derived under conditions of increasing returns to scale and imperfect competition in a general equilibrium model with any finite number of goods and factors these conditions yield generalizations of the theorems of comparative advantage in goods and implicit factor trade the factor content version of the h o theorem other generalizations can be obtained if one assumes quasihomothetic preferences and that welfare effects are dominated by price rather than income effects copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

increasing returns and the specific factors model in recent years trade theorists have been increasingly interested in the role of economies of scale in international trade models yet the literature to date seems to lack a simple treatment of income distribution and related issues in the presence of economies of scale the present paper attempts to fill this gap by incorporating increasing returns to scale irs into the standard specific factors model trade theorists have begun to view the specific factors model as the favored vehicle for analyzing the economy wide effects of changes in commodity prices factor endowments and other exogenous variables the strongest case in favor of this model has been presented by neary 16 who argues that the model provides a rigorous general equilibrium foundation for partial equilibrium analysis as far as the supply side of the economy is concerned whereas with icm partial equilibrium reasoning will frequently be misleading 2 he further conjectures that icm is the source of all the paradoxes which are peculiar to international trade theory with the exception of those which arise from the failure to adopt first best policies in light of these views in the literature it is of interest to investigate how robust the predictions of the specific factors model are in the presence of economies of scale the analysis in this paper has important implications for the literature on irs as well as that on the specific factors model the more important of these implications may be summarized as follows first in a small open economy characterized by national intraindustry irs the condition for local dynamic stability is equivalent to the condition for a normal output price response 3 moreover in contrast with the findings of the irs models based on free intersectoral mobility of all factors as exemplified in herberg and kemp 6 this condition may be satisfied everywhere along the production possibilities frontier second stability of an equilibrium in the presence of irs is not sufficient to guarantee the validity of many results of the standard specific factors model responses of a small

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

the bullwhip effect on inventory a perspective on information quality abstractin recent years there has been a vast increase in the quantity of information shared across supply chain we investigate how the timeliness and accuracy of information quality affect the value of information sharing we use the inventory bullwhip effect bwe to measure the value of information sharing in a two level supply chain consisting of one retailer and one manufacturer the retailer faces a price sensitive demand and the price is an ar 1 process our study shows if customer demand and retailer s immediate order are delayed using retailer s historical order quantity to forecast can decrease manufacturer s bwe if information errors happen during delivery and utilization information sharing is not always valuable for the manufacturer sometimes no information sharing can decrease much more of bwe if information errors occur when the retailer collects demand information value of information sharing is more significant than when there are no information errors

the influence of labour taxes on the migration of skilled workers this paper investigates empirically the role of taxes on labor for the stock of expatriates and the migration flows of skilled workers given the increasing mobility of labour especially of high skilled people and expatriates it is interesting to see to what extent labour income taxes and social security contributions determine migration flows we collect data on personal income tax profiles for 49 economies and the year 2002 in particular we determine the component of labor taxes which is borne by employers and the one that is borne by employees following the oecd s taxing wages approach for the latter we calculate the progressivity of personal income tax rates between the average wage and five times the average wage this may be interpreted as the tax progression which is relevant for well paid workers then we use the personal income tax variables to estimate their effect on bilateral stocks of expatriates into oecd countries and the migration of skilled workers into these countries personal income tax rates turn out to have a robust negative effect on cross border flows of skilled workers in the oecd

increasing returns dynamic stability and international trade abstract a simple two country two good model in which economies of scale form the basis of international trade is presented it is shown that the larger country exports the good characterized by increasing returns and imports the good subject to constant returns a key feature of the paper is a comprehensive stability analysis it turns out that a normal output price response is necessary for d stability furthermore the marshall lerner condition must be satisfied in terms of the short run import demand elasticities for local dynamic stability finally if international factor mobility is permitted cross hauling of specific factors may be observed

issues of strategic trade policy for small countries three game theoretic issues of international trade and commercial policy are examined fro m the special perspective of small countries in oligopolistic market s the question is when their ability to remain credibly small player s can be an advantage in negotiations about trade regimes small cou ntries gains from various kinds of trade are analyzed and their abi lity to achieve a better outcome by being more patient is considered the formation of alliances is briefly examined where small countrie s can gain if they can become free riders or pivotal voters copyright 1987 by the editors of the scandinavian journal of economics

marshallian stability and long run equilibrium in the theory of international trade with factor market distortions and variable returns to scale abstract we show that perverse comparative statistics paradoxes associated with factor market distortions and variable returns to scale vanish if the equilibrium is marshallian stable and that the equilibrium is marshallian stable iff it is a stable long run equilibrium

endogenous information acquisition in supply chain management in this paper we analyze an endogenous determination of efforts put into information acquisition and its impact on supply chain management more specifically we consider a supplier who sells a product to a buyer during a single selling season prior to placing an order with the supplier the buyer has an option to acquire additional information about the demand by hiring experts who are capable of providing forecasts because a commission fee must be paid to each hired expert there exists a tradeoff between the cost and the value of the information and the buyer needs to determine how much information to acquire we derive the optimal information acquisition level in an integrated setting and compare it with that determined in a decentralized setting we also analyze several types of supply contracts to examine if they can coordinate the supply chain and allow an arbitrary division of system profit between the supplier and the buyer

corporate tax policy and unemployment in europe an applied general equilibrium analysis this paper analyses the impact of corporate taxes on structural unemployment using an applied general equilibrium model for the european union we find that the unemployment and welfare effects of corporate taxes differ considerably among european countries the magnitude of these effects rises in particular in the broadness of the corporate tax base of a country and the strength of international spillover effects through foreign direct investment the effect on unemployment is smaller if the substitution elasticity between labour and capital is large if international spillover effects operate primarily via multinational profit shifting and with small labour market imperfections although the effect of corporate taxes on unemployment may be smaller than the effect of labour and value added taxes e g under relatively strong real wage resistance the welfare costs of corporate taxation are typically larger for most european countries under plausible parameters especially under strong international spillovers

factor mobility trade and welfare abstract the paper develops a north south model which is driven by scale economies in the modern sector the model predicts that skilled and unskilled labor migrate from south to north and capital migrates from north to south migration of skilled labor and capital exhibits complementarity with trade while migration of labor may exhibit complementarity or substitutability if the terms of trade effects are ignored small movements of all factors affect the welfare of the population in south negatively and of that in north positively the effects of migration on the terms of trade are ambiguous in general

transboundary pollution and the gains from trade we analyse the effects of transboundary pollution on trade patterns and welfare in a general equilibrium trade model production in a dirty industry generates pollution that negatively effects productivity both at home and abroad in a clean industry trade may lead to the spatial separation of production but the existence of transboundary pollution can offset the benefits from specialization we present a general model in which the effects of a country s pollution is country specific we analyse particular cases that correspond to an acid rain problem and a problem in which one country has a cleaner technology than the other we also present some results for small open economies to examine the effects of transboundary pollution in the absence of terms of trade effects

using return policies to elicit retailer information we show that a manufacturer may prefer to offer a return policy when dealing with a retailer who holds advance knowledge about market conditions roughly stated the manufacturer offers a liberal return allowance in lieu of a lower price to satisfy a retailer facing unfavorable market conditions a retailer facing favorable conditions finds this tradeoff unattractive because he is likely to sell the merchandise anyway and thus not make as much use of the generous return terms as a consequence a retailer is less inclined to misstate market conditions by serving as an additional control instrument a returns policy reduces the manufacturer s need to ration cut production

global models of trade in agriculture and related environmental modelling a review and assessment the continuing process of global integration bears implications for farmers and related supplying and processing industries in all parts of the world but also for the rest of the world economy an assessment of agricultural and trade policy impacts is bound to be complex and is often supported by quantitative modeling analysis this article provides an assessment of the present state of applied modelling in the area of trade and agricultural policies we provide in this paper a comparative assessment of alternative modelling approaches considering a total of 16 partial equilibrium and general equilibrium models the assessment includes theoretical modelling foundations datasets employed and institutional aspects such as model maintenance and dissemination of results a typology of models is provided by structuring the assessment along a clear set of evaluation criteria

a simple dynamic model of uneven development and overtaking this paper extends the brezis et al 1993 ricardian leapfrogging model by introducing geographically mobile capital and allowing for a wider variety of development patterns in a two region economy localised learning by doing causes specialisation and uneven development technological change reverses the existing development pattern if the new technology locates in the low wage region however the development pattern may also be reinforced if spillovers between the old and the new technology make the leading region a more attractive location capital flows are explicitly analysed and it is furthermore shown that inter regional transfers may reduce the chance of take off

jeux sans frontieres tax competition and tax coordination when countries differ in size closer international integration is putting increasing pressure on existing national tax structures this paper uses a simple two country model to address a range of consequent policy concerns focusing particularly on the role of country size differences in size exacerbate the inefficiency from noncooperative behavior harming both countries the smaller country loses from harmonization to any tax rate between those set in the noncooperative equilibrium but both countries gain from the imposition of a minimum tax anywhere in that range the fully optimal response to freer cross border trade however may be to do nothing jel h20 h77

the positive theory of production externalities under perfect competition abstract aggregate cost and factor demand functions are used to develop a local envelope function which is applied in a general equilibrium model with production externalities to shed new light on the relationship between the true economy marginal costs and outputs this relationship induces a structure to the relationship between actual prices and outputs by means of the assumption of no factor demand reversals associated with externality effects we also provide generalisations of the stolper samuelson and rybczynski theorems highlighting the role of the externality effects

migration and wage effects of taxing top earners evidence from the foreigners tax scheme in denmark this paper analyzes the eects of income taxation on the international migration and earnings of top earners using a danish preferential foreigner tax scheme and populationwide danish administrative data this scheme introduced in 1991 allows new immigrants with high earnings to be taxed at a preferential at rate for a duration of three years we obtain two main results first the scheme has doubled the number of highly paid foreigners in denmark relative to slightly less paid and therefore ineligible foreigners this translates into a very large elasticity of migration with respect to 1 minus the average tax rate on foreigners between 1 5 and 2 second we nd compelling evidence of a negative eect of the scheme induced reduction in the average tax rate on pre tax earnings of foreign migrants at the individual level this nding can be rationalized by a matching frictions

interconnected communications networks and home market effects abstract this study develops a model of trade that highlights the effects of the interconnection of country specific communications networks as a driving force behind trade in high tech products with positive transport costs by constructing a two country model of monopolistic competition with two production factors it is shown that the locational decisions of firms may magnify the influence of interconnected networks in a reversal of the standard home market effects the abundance of unskilled labour in the developing countries can attract high tech firms from the developed countries jel classification d43 f12 l13

channel coordination and quantity discounts this paper presents a model for analyzing the impact of joint decision policies on channel coordination in a system consisting of a supplier and a group of homogeneous buyers the joint decision policy characterized by the unit selling price and the order quantity is coordinated through quantity discounts and franchise fees both the annual demand rate and the operating cost including the purchase ordering and inventory holding costs depend on the joint decision policy employed this paper contributes by integrating work addressing quantity discounts on inventory and ordering policies and work focusing on the control mechanism provided by quantity discounts in channel coordination it is shown that the optimal all unit quantity discount policy is equivalent to the optimal incremental quantity discount policy in achieving channel coordination furthermore it is shown that quantity discounts alone are not sufficient to guarantee joint profit maximization the analyses of the general models are illustrated by specific analytical results obtained for a given demand function