information transmission cournot and bertrand equilibria we examine how incentives for two duopolists to honestly share information change depending upon the nature of competition cournot or bertrand and the nature of the information structure while in earlier papers uncertainty is about an unknown common demand intercept in the present paper uncertainty is about unknown private costs the different information structure reverses the incentives to share information while with unknown common demand sharing is a dominant strategy with bertrand competition and concealing is a dominant strategy with cournot competition with unknown private costs sharing is a dominant strategy with cournot competition and concealing is a dominant strategy with bertrand competition

effect of environmental regulations on china s graphite export abstract the disparity between import and export prices of china s graphite products indicates that china suffers a heavy loss of graphite resources china s graphite resource abundance doesn t transform into an economic advantage this paper tries to promote sustainable use of china s graphite resources by investigating the effect of environmental regulations on china s graphite resource export based on the gravity model and the panel data of the top 30 countries that imported graphite resources from china during 2005 2014 economical mass population graphite export price export duty refund edr language recession and political conflicts are selected as measurable indicators of environmental regulations to study how the corresponding changes affect graphite export values the results demonstrate that the determinants of china s graphite export values include economical mass export price export duty refund and language policy recommendations are then raised in order to improve sustainable development of china s graphite industry

the supply and demand side impacts of credit market information abstract we utilize a unique pair of experiments to isolate the ways in which reductions in asymmetric information alter credit market outcomes a guatemalan microfinance lender gradually started using a credit bureau across its branches without letting borrowers know about it one year later we ran a large randomized credit information course that described the existence and workings of the bureau to the clients of this lender this pairing of natural and randomized experiments allows us to separately identify how new information enters on the supply and the demand sides of the market our results indicate that the credit bureau generated large efficiency gains for the lender and that these gains were augmented when borrowers understood the rules of the game the credit bureau rewarded good borrowers but penalized weaker ones increasing economic differentiation

entry and strategic information display in credit markets in many countries lenders voluntarily provide information about their borrowers to private credit registries a recent world bank survey reveals that the display of a lender s own borrower information is often not reciprocated that is access to these registries does not require the prior provision of proprietary data we argue that incumbent lenders release information about a portion of their profitable borrowers for strategic reasons the reasoning is that the pool of unreleased borrowers becomes characterised by a severe adverse selection problem this prevents the entrants from bidding for all the incumbent s profitable borrowers and reduces their scale of entry

horizontal and vertical intra industry trade an empirical test of the homogeneity hypothesis in this paper we study if and how country specific factors affect intra industry trade iit when heterogeneity among sectors is allowed for the paper is novel in that it is the first that addresses an issue raised by greenaway et al oxford bulletin of economics and statistics 1999 61 365 specifically employing data on a sample of oecd countries over a 10 year period 1997 1998 we build on and take forward a methodology pioneered by balassa and bauwens economic journal 1987 97 923 to study the determinants of horizontal and vertical iit using a multi industry approach in doing this we seek to avoid the more extreme measurement problems by allowing for heterogeneity among sectors when country specific factors are analysed and among countries when industry specific factors are considered the results are compared to those obtained using the traditional method that does not consider intersectoral heterogeneity we find that the two models yield statistically different results moreover the tests regarding the choice of model that is econometric tests designed to compare one model with another when different sets of explanatory variables are used confirm the relevance of intersectoral heterogeneity in affecting iit to the best of our knowledge a similar analysis has not yet appeared in the empirical literature on iit

the emergence of iran in the world car industry an estimation of its export potential in the past 10 years iran has been emerging as a major car producer in the world however due to delays in economic reforms iranian car exports have not increased as much as production this paper presents a first estimation of the iranian export potential in the car industry based on new theoretical developments of the gravity equation an empirical bilateral trade model is proposed it includes sectoral variables car production import tariffs as well as other original variables such as expectations and hysteresis we then develop a dataset which includes the 40 major car exporting countries in the world 34 importing countries a 10 year time period as well as four car production groups the model is then estimated by using alternative panel data estimators such as those of hausman and taylor and dynamic estimators as well as transformed variables estimators export potential is finally calculated from the residuals of the model results show that iranian current car exports are about 100 times less than their fitted values this indicates that there is a significant export potential for iran especially toward india china russia as well as smaller neighbours turkey pakistan central asian countries as a result iran could become the major auto supplier in the middle east however this requires the completion and success of ongoing economic reforms

critical evidence on comparative advantage north north trade in a multilateral world there are two principal theories of why countries trade comparative advantage and increasing returns to scale which is most important in practice the large volume of intra oecd trade is frequently cited as critical evidence on this question it is argued that comparative advantage unlike scale economies is incapable of accounting for the large volume of trade between seemingly similar economies this is a theoretical claim in this paper i show that it is possible to give an account of this trade based on comparative advantage the elements that may give rise to a large volume of north north trade are traced to identifiable features of technology and endowments

scale economies and the volume of trade in this paper we split the number of actual years of schooling into five components effective years repeated years skipped years inefficient routing years and dropout years estimation of earnings equations using these explanatory variables produces some interesting empirical and theoretical results the main empirical finding is that the concepts of actual and effective years of schooling that are usually used in the estimation of earnings equations are statistically inferior to our classification both concepts pro

pricing and the news vendor problem a review with extensions in the newsvendor problem a decision maker facing random demand for a perishable product decides how much of it to stock for a single selling period this simple problem with its intuitively appealing solution is a crucial building block of stochastic inventory theory which comprises a vast literature focusing on operational efficiency typically in this literature market parameters such as demand and selling price are exogenous however incorporating these factors into the mode l can provide an excellent vehicle for examining how operational problems interact with marketing issues to influence decision making at the firm level in this paper we examine an extension of the newsvendor problem in which stocking quantity and selling price are set simultaneously we provide a comprehensive review that synthesizes existing results for the single period problem and develop additional results to enrich the existing knowledge base we also review and develop insight into a dynamic inventory extension of this problem and motivate the applicability of such models

sharing default information as a borrower discipline device abstract creditors often share information about their customers credit records besides helping them to spot bad risks this acts as a disciplinary device if creditors are known to inform one another of defaults borrowers must consider that default on one lender would disrupt their credit rating with all the other lenders this increases their incentive to perform however sharing more detailed information can reduce this disciplinary effect borrowers incentives to perform may be greater when lenders only disclose past defaults than when they share all their information in some instances by fine tuning the type and accuracy of the information shared lenders can raise borrowers incentives to their first best level

intra industry trade and business cycles in asean a new resolve for both increased economic integration and monetary and exchange rate cooperation has started to emerge in the association of southeast asian nations asean especially since the 1997 1998 asian financial crisis according to the optimum currency area theory the degree of trade integration is one of the most important criteria for joining a currency union the large increase in intra asean trade in recent years raises the question of whether the asean countries are becoming better prepared to form a currency union this article sets to test whether the recorded increase in intra asean trade is leading the asean members to closer economic integration and thus to better satisfy the criteria for a common currency two separate models are estimated for that purpose first a variation of the model of frankel and rose 1997 was estimated for the asean members next a new panel data methodology was conducted the results with our own model were very significant and robust when four of the ase

the economic significance of national border effects to address the economic significance of national border effects this paper provides evidence on two fundamental questions 1 do large border effects arise because of high perceived price wedges between foreign and domestic products or because imports and domestic goods are very close substitutes and 2 if price wedges are important do they reflect distortionary barriers to trade or do they arise from nondistortionary factors such as differences in transactions costs or product characteristics i conclude that while border effects may imply barriers welfare costs and a role for policy distortions are probably not as substantial as initial border results suggested jel f1

measuring globalization of international trade theory and evidence summary measuring globalization requires a standard of perfect international integration as a benchmark that a single world space would reach under conditions of geographic neutrality in international trade we define this standard and present indicators for openness connectedness and integration for each specific economy and for the world economy we apply our indicators to data on trade flows for 59 countries for the 1967 2004 period results show that trade integration is higher than what traditional openness indicators suggest several economies find high levels of integration but the low degree of openness in some large economies jeopardizes the progress of globalization

towards a new trade policy between the usa and middle east countries estimating trade resistance and export potential at the time of the conclusion of free trade areas ftas between the usa and middle east and north african mena countries there is a lack of literature concerning the measurement of the current us export position with regards to these countries and the us export potential in this area from recent developments of gravity models this paper derives an estimable equation which includes various trade resistance variables notably border effects multilateral resistance as well as specific bilateral effects the model is tested in order to scrutinise the impact of these variables on us exports to mena countries as well as the us export potential in this area to that end a selection of panel data specifications is proposed mainly hausman and taylor models as well as arellano and bond dynamic models results unambiguously indicate that as compared to the other oecd countries the usa suffers from a substantial trade integration deficit with mena countries this is reflected by the strongly negative values of the us mena bilateral fixed effects as well as the high bilateral border effects in addition the estimated actual potential us export ratio to these countries is only 0 76 therefore implementing an fta between the usa and mena countries may allow the former to progressively improve its export position in this area this would also help mena countries diversify their supplying sources

does eu enlargement increase agro food export duration this paper examines the impact of eu enlargement on agro food export performance across 12 new eu member states and five newly independent states in the eu markets covering the period 1999 to 2007 the performance is examined by duration of export and hazard model we find larger duration for the agro food exports from the new eu member states the results confirm gains from the eastward eu enlargement and governance on export increases and longer duration for exporting higher value added specialized consumer ready food and more competitive niche agro food products

a price setting newsvendor problem under mean variance criteria the single product single period newsvendor problem with two decision variables namely price and stock quantity is considered the performance measure in addition to the expected revenue includes the variance of the income scaled with a risk parameter we present conditions for the concavity of this risk sensitive performance measure and the uniqueness of the optimal solution for both risk averse and risk seeking cases under the additive demand model and compare the results to others previously published these conditions are introduced in terms of the lost sales rate elasticity furthermore we provide numerical examples that aim to endorse the theoretical results herein explained

the impacts of exchange rate volatility on vegetable trade flows trade flows of commodities are generally affected by the principles of comparative advantage in a free trade however trade flows might be enhanced or distorted not only by various government interventions but also by exchange rate fluctuations among others this study applies a commodity specific gravity model to selected vegetable trade flows among organization for economic co operation and development oecd countries to determine the effects of exchange rate uncertainty on the trade flows using the data from 1996 to 2002 the results show that while the exchange rate uncertainty significantly reduces trade in the majority of commodity flows there is evidence that both short and long term volatility have positive effect on trade flows of specific commodities this study also tests the regional preferential trade agreements such as the north american free trade agreement nafta the asia pacific economic cooperation apec and the eu and their different effects on commodities

openness to trade in manufactures in the oecd abstract how open are the advanced economies to trade with each other in this paper openness is calculated relative to the predictions of the monopolistic competition trade model using data on manufacturing trade and production in the oecd in 1985 the paper finds that 1 japan imports much less than other large oecd countries while the european countries have larger import volumes than does the us 2 japan and the us engage in less intra industry trade than the rest of the oecd and 3 the eu countries are less open to imports from japan and the us than those countries are open to imports from the eu

alternative hypotheses and the volume of trade the gravity equation and the extent of specialization we examine why the gravity equation works and the implications for its use first we demonstrate that the gravity equation as a statistical relationship can be generated from a model with incomplete specialization and trade costs second we analyse the predominance of zero bilateral trade values as a puzzle broadly inconsistent with the complete specialization models typically used to derive the gravity equation but consistent with the alternative hypothesis of incomplete specialization third we demonstrate that the explanation for why the gravity equation works has considerable relevance for how the gravity equation is interpreted and used and how we view bilateral trade diverses hypotheses et le volume du commerce l equation de gravite et le degre de specialisation les auteurs examinent comment fonctionne l equation de gravite et les implications de son usage on propose trois contributions d abord on montre que l equation de gravite en tant que relation statistique et non pas en tant que prediction specifique de commerce bilateral peut etre produite a partir d un modele avec specialisation incomplete et couts de transaction ensuite on analyse la predominance de valeurs zero dans les commerces bilateraux en tant qu enigme generalement incompatible avec les modeles de specialisation complete utilises habituellement pour deriver l equation de gravite mais compatible avec l hypothese de rechange de specialisation incomplete enfin on montre que les raisons pour lesquelles l equation de gravite fonctionne ont un impact sur la facon de l interpreter et de l utiliser et sur notre facon de concevoir le commerce bilateral

exchange of cost information in oligopoly when do oligopolists gain by sharing their private information about their costs with one another what are the social welfare effects of such information exchange i study these questions by comparing the oligopolists expected profits under a cost sharing agreement with their expected profits in the bayesian equilibrium that would arise without cost sharing i also analyse the firms decisions to form a trade association to share their cost data under conditions of linear demand and cournot behaviour industrywide information exchange is the unique point in the core of the trade association membership game the exchange of cost data increases expected profits and welfare but reduces expected consumer surplus cost sharing increases efficiency by raising the market shares of lower cost firms and reducing the variability of aggregate output consumer surplus is diminished however because the variance of output is reduced and consumer surplus is a convex function of output

drivers of vertical intra industry trade the case of the hungarian agri food sector this article investigates the drivers of vertical intra industry trade viit in hungarian agri food trade with the european union eu it identifies three possible ways to measure intra industry trade iit flows ghm ff and n methods and defines six hypotheses to test for the drivers of viit with three panel data models static dynamic and fevd the results suggest that factor endowments are negatively while economic size is positively and significantly related to viit distance and viit were found to be negatively related as is commonly the case in the standard gravity model it was also found that viit is greater if a new member state nms is exporting agri food produce to an nms while eu accession has ambiguously influenced the share of viit in general it seems that our results are independent from model estimations and interestingly they do not differ considerably as we a priori expected moreover our results seem surprisingly robust across various measurements of itt

endogenous communication among lenders and entrepreneurial incentives if banks have an informational monopoly about their clients borrowers may curtail their effort level for fear of being exploited via high interest rates in the future banks can correct this incentive problem by committing to share private information with other lenders the fiercer competition triggered by information sharing lowers future interest rates and future profits of banks but provided banks retain an initial informational advantage their current profits are raised by the borrowers higher effort this trade off determines the banks willingness to share information their decision affects credit market competition interest rates volume of lending and social welfare article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

trade creation and diversion revisited accounting for model uncertainty and natural trading partner effects summary the effect of preferential trade agreements ptas on trade flows is subject to model uncertainty stemming from the diverse and even contradictory effects suggested by the theoretical pta literature the existing empirical literature has produced remarkably disparate results and the wide variety of empirical approaches reflects the uncertainty about the correct set of explanatory variables that ought to be included in the analysis to account for the model uncertainty that surrounds the validity of the competing pta theories we introduce bayesian model averaging bma to the pta literature statistical theory shows that bma successfully incorporates model uncertainty in linear regression analysis by minimizing the mean squared error and by generating predictive distributions with optimal predictive performance once model uncertainty is addressed as part of the empirical strategy we find strong evidence of trade creation trade diversion and open bloc effects our results are robust to a range of alternative empirical specifications proposed by the recent pta literature copyright 2010 john wiley sons ltd

is relationship lending special evidence from credit file data in germany the german financial market is often characterized as a bank based system with strong bank customer relationships the corresponding notion of a housebank is closely related to the theoretical idea of relationship lending it is the objective of this paper to provide a direct comparison between housebanks and normal banks as to their credit policy therefore we analyze a new data set representing a random sample of borrowers drawn from the credit portfolios of five leading german banks over a period of five years we use credit file data rather than industry survey data and thus focus the analysis on information that is directly related to actual credit decisions in particular we use bank internal borrower rating data to evaluate borrower quality and the bank s own assessment of its housebank status to control for information intensive relationships the major results of our study support the view that housebanks are able to establish a distinct behavioral pattern consistent with the idea of long term commitment we find that housebanks do provide liquidity insurance in situations of unexpected deterioration of borrower ratings with respect to loan pricing we find no evidence for intra or intertemporal price differentiation related to housebanking

impacts of free trade agreements on agricultural trade creation and trade diversion this paper evaluates agricultural trade creation and diversion effects of the most important free trade agreements ftas trade creation and diversion effects are estimated using a poisson pseudo maximum likelihood ppml estimator with various fixed effects to deal with heteroskedasticity and zero trade observations the analysis finds that ppml estimation is preferred to ols and the estimated impacts of ftas are different if zero trade observations are considered the asean china preferential trade agreement eu 15 eu 25 and southern african development community agreements have generated large increases in agricultural trade among their members

country size income level and intra industry trade this study investigates three testable hypotheses of intra industry trade it begins by developing a theoretical two country model the model explicitly includes two goods differentiated products and homogeneous goods then three empirical hypotheses are derived as follows the share of intra industry trade will be large a if the two economies are of similar size b if the capital labour endowment ratio of both countries is similar and c if the total size of the two economies is large from the cross sectional analysis using 1970 1994 data results are obtained that support the model furthermore the results are confirmed using panel analysis on the pooled data

anti poaching agreements in labor markets we analyze competition for experienced workers among wage setting firms the firms can design poaching offers with higher wages to workers who switch from rivals relative to wages paid to their own existing employees we evaluate the profit and welfare effects of anti poaching agreements that eliminate poaching offers as a recruiting method anti poaching agreements increase industry profits whereas workers are made worse off we show that the effects of anti poaching agreements on total welfare are determined by the magnitude of workers switching costs and the productivity change associated with switching employers jel l41 l40 j42

from institutions to financial development and growth what are the links this paper presents an integrated overview of the literature linking institutions financial development and economic growth from the large body of research on institutional development the paper first selects those contributions that make it possible to study the role of institutional arrangements in ameliorating worsening the information frictions and transaction costs that characterize the development of financial markets the paper then investigates the theoretical mechanisms by which these specific frictions affect economic growth and presents the stock of empirical evidence quantifying the impact of institutions on growth through financial development

economic effects of positive credit information sharing the case of korea in many countries in addition to negative credit information such as loan default and arrears positive credit information is also exchanged on a voluntary and reciprocal basis employing optimal credit decision models of profit maximizing banks and utilizing a unique dataset of 2 million consumer loan obligors in korea we investigate the economic effects of sharing positive credit information in addition to negative credit information already exchanged we find that the discriminatory power of the credit scoring model improves significantly we proceed to investigate the economic effects of the information gap in a competitive credit market by assuming two representative banks that differ only in the level of credit information sharing the bank that utilizes negative information only suffers from deterioration of the borrower pool and reduced profit as high credit risk borrowers are more concentrated on this bank due to underpricing of risks our finding suggests that banks have incentives to volunt

expanding rtas trade flows and the multinational enterprise we test the relationship between the size of regional trade agreements rtas and openness by using a gravity equation with multilateral trade factors our sample includes 11 rtas seven with constant membership and four with expanding membership regional trade bias declines with the size of the club three of the four expanding rtas have already surpassed their optimal size we also explore the link between openness of the rta and the geographic strategy of the multinational enterprise we find strong evidence in favor of the regionalization strategy which has been enhanced by the presence of rtas

does information sharing reduce the role of collateral as a screening device this is the authors accepted refereed and final manuscript to the article publisher s version available at http dx doi org 10 1016 j jbankfin 2014 02 010

on the trade impact of nominal exchange rate volatility what is the effect of nominal exchange rate variability on trade i argue that the methods conventionally used to answer this perennial question are plagued by a variety of sources of systematic bias i propose a novel approach that simultaneously addresses all of these biases and present new estimates from a broad sample of countries from 1970 to 1997 the estimates indicate that nominal exchange rate variability has no significant impact on trade flows

information and bank credit allocation abstract private information obtained by lenders leads to borrower capture to the extent that such information cannot be communicated credibly to outsiders we analyze how this capture affects the loan portfolio allocation of informed lenders first we show that banks charge higher interest rates and finance relatively less creditworthy borrowers in market segments with greater information asymmetries second when faced with greater competition from outside lenders banks reallocate credit toward more captured borrowers flight to captivity third if borrower quality and captivity are sufficiently correlated an increase in the competitiveness of uninformed lenders can worsen the informed lender s overall loan portfolio the model explains observed consequences of financial liberalizations

information sharing and lending market competition with switching costs and poaching abstract we analyze information sharing with repeated banking competition in the presence of switching costs we find that information sharing renders poaching more profitable in future rounds of competition since the poaching activities can be targeted towards more creditworthy borrowers we find that information sharing reduces relationship benefits and therefore relaxes competition for initial market shares information sharing introduces a welfare tradeoff by promoting equilibrium profits at the expense of talented entrepreneurs whenever market power persists in credit market whereas it is a matter of indifference without market power thus information sharing may induce exclusion of creditworthy borrowers from credit markets

estimating the demand distributions of single period items having frequent stockouts abstract very often the service level of a single period newsboy type product is set at such a low level that i stockouts occur in the majority of the periods and ii a large right hand side of the empirical demand distribution is never observable this paper reports a practical approach for estimating the periodic demand distribution of such a product the approach has three components i using the non parametric product limit method to estimate the fractiles of the observable left hand side of the empirical distribution ii using a subjective approach and an extrapolation of hourly sales approach to fill in the missing right hand side of the empirical distribution iii fitting the estimates obtained in the preceding two components to a tocher curve which can handle the diversity of shapes of a realistic demand distribution and is also computationally very convenient for subsequent calculations for production inventory decisions the entire approach is shown to be simpler but more powerful than existing alternatives for the problem

the determinants and profitability of switching costs in chinese banking this article models the determinants of bank switching costs in china in terms of bank characteristics and non bank variables it also determines the contribution of switching costs to banks profits using a sample of 151 banks over the period 2003 2013 it reports a positive relationship between bank profitability and switching costs the main result is that bank size measured by total assets has a complex relationship with switching costs competition between small banks creates the incentive for lock in and increased switching costs whereas very large banks are less exercised by lock in and switching costs

the suspension of borrowing an implicit penalty for loan default under imperfect information abstracta credit seeker may be suspended from borrowing for a period of time due to a previous default such suspension is widely used in bank lending through credit check our work analyses the effects of suspension on the investment choice of borrowers under uncertainty and on the lending policy of banks facing asymmetric information we show that suspension should be tightened at low loan rates but loosened otherwise to improve the repayment performance of borrowers we also show that although credit rationing may not be completely removed due to imperfect information the excess demand for credit or transitive waiting in the market can actually be attenuated by such efficient use of suspension our theoretical predictions are consistent with observed cyclical patterns of changes in lendingrates and suspension severity

a test of trade theories when expenditure is home biased we develop a criterion to distinguish two dominant paradigms of international trade theory constant returns perfectly competitive models and increasing returns monopolistically competitive models our analysis makes use of the pervasive presence of home biased expenditure it predicts that countries relative output and their relative home biases are positively correlated in increasing returns sectors the home bias effect while no such relationship exists in constant returns sectors this discriminating criterion turns out to be robust to a number of generalisations of the baseline model our empirical results suggest that the increasing returns model fits particularly well for the mechanical and electrical engineering industries which account for close to half of manufacturing output

intra industry trade with multinational firms recent developments including the analysis of firm level adjustment to falling trade costs have contributed to a revival of interest in intra industry trade iit most empirical work still relies on the standard grubel lloyd measure this however refers only to international trade disregarding income flows stimulated by repatriated profits of multinational firms given the overwhelming importance of the latter this is a major shortcoming this paper provides a guide to measurement and estimation of the determinants of bilateral iit shares from the perspective of new trade theory with multinational firms we develop an analytically solvable general equilibrium model to investigate the impact of investment costs multinational activities and income flows from repatriated profits we also discuss and quantify the bias of the grubel lloyd index associated with repatriated profit flows of multinationals using bias corrected versions of the grubel lloyd index as the dependent variable we demonstrate that the determinants motivated by our theoretical analysis offer important insights into variations in iit shares

currency hedging and goods trade abstract a puzzle in empirical international finance is the difficulty in finding a large and negative effect of exchange rate volatility on international trade a common explanation is the availability of hedging instruments this paper examines the empirical validity of this explanation using data on over 1000 country pairs which countries have currency hedging instruments is not perfectly observable this paper deals with the problem by specifying an endogenous regime switching regression there are two main findings first there is no evidence in the data to support the validity of the hedging hypothesis second for country pairs with large trade potential exchange rate volatility deters goods trade to an extent much larger than that typically has been documented in the literature without using the switching regression specification

institutions infrastructure and trade we work with a panel of bilateral trade flows from 1988 to 2002 exploring the influence of infrastructure institutional quality colonial and geographic context and trade preferences on the pattern of bilateral trade we are interested in threshold effects and so emphasize those cases where bilateral country pairs do not actually trade we depart from the institutions and infrastructure literature in this respect using selection based gravity modeling of trade flows we also depart from this literature by mixing principal components to condense our institutional and infrastructure measures with a focus on deviations from expected values for given income cohorts to control for multicollinearity infrastructure and institutional quality are significant determinants not only of export levels but also of the likelihood exports will take place at all our results support the notion that export performance and the propensity to take part in the trading system at all depends on institutional quality and access to well developed transport and communications infrastructure indeed this dependence is far more important empirically than variations in tariffs in explaining sample variations in north south trade this implies that policy emphasis on developing country market access instead of support for trade facilitation may be misplaced

history based price discrimination and entry in markets with switching costs a welfare analysis abstract we analyze history based price discrimination in an asymmetric industry where an incumbent protected by switching costs faces an entrant who does not have access to information about consumers purchase histories we demonstrate that consumer surplus is higher with uniform pricing than with history based price discrimination we find that the entry decision is invariant to whether the incumbent implements history based pricing or uniform pricing this implies that the potential abuse of market dominance imposed by history based price discrimination is exploitation not exclusion finally we establish that the profit gain to the incumbent from history based pricing exceeds the associated loss to consumers

does aid cause trade evidence from an asymmetric gravity model anderson and vanwincoop developed what has become the standard framework for framing and interpreting empirical work using the gravity model their framework relies heavily on an assumption of symmetry among countries for issues related to north south trade this assumption is problematic in this paper we develop an asymmetric extension of the anderson vanwincoop framework appropriate to the analysis of north south trade where northern countries produce differentiated goods and southern countries homogenous ones in addition we use an appropriately extended version of baier and bergtrand and taylor linear expansion thus permitting its estimation using good old ols the result is an empirical model that i is better suited to the analysis of north south trade ii is easy to estimate and compute comparative statics not requiring a customised nls routine and given the way the south is included iii provides a simple explanation of zero trade flows between some country pairs a fact still not fully explained in the literature as an illustration of its use we examine the empirical link between foreign aid and trade

an empirical assessment of the welfare effects of reciprocal dumping abstract can two way trade in similar products lead to lower welfare than if such trade was banned theory answers yes to empirically investigate this proposition we examine swedish imports of bottled water assuming one shot bertrand and cournot competition we can use the estimates from a structural model of demand to uncover marginal costs we simulate the effect on consumer and producer surplus of banning imports we do not find convincing evidence that banning imports would increase overall welfare given our choice of market this suggests we should not be overly concerned with the welfare effects of two way trade in consumer goods that are close to homogenous

monopolistic competition and international trade reconsidering the evidence we test some propositions about international trade flows that are derived from models of monopolistic competition developed by elhanan helpman and paul krugman we investigate whether the volume of trade between oecd countries is consistent with the predictions of a model in which all trade is intraindustry trade in differentiated products we then repeat the test with non oecd countries we also investigate whether the share of intraindustry trade is consistent with a more general theoretical model in which some but not all trade is intraindustry trade our results lead us to question the apparent empirical success of these models

a robust optimization approach to inventory theory we propose a general methodology based on robust optimization to address the problem of optimally controlling a supply chain subject to stochastic demand in discrete time this problem has been studied in the past using dynamic programming which suffers from dimensionality problems and assumes full knowledge of the demand distribution the proposed approach takes into account the uncertainty of the demand in the supply chain without assuming a specific distribution while remaining highly tractable and providing insight into the corresponding optimal policy it also allows adjustment of the level of robustness of the solution to trade off performance and protection against uncertainty an attractive feature of the proposed approach is its numerical tractability especially when compared to multidimensional dynamic programming problems in complex supply chains as the robust problem is of the same difficulty as the nominal problem that is a linear programming problem when there are no fixed costs and a mixed integer programming problem when fixed costs are present furthermore we show that the optimal policy obtained in the robust approach is identical to the optimal policy obtained in the nominal case for a modified and explicitly computable demand sequence in this way we show that the structure of the optimal robust policy is of the same base stock character as the optimal stochastic policy for a wide range of inventory problems in single installations series systems and general supply chains preliminary computational results are very promising

a generalized design for bilateral trade flow models abstract this paper suggests a full interaction effects design to analyze bilateral trade flows this is illustrated with an unbalanced panel of bilateral trade between the triad eu15 usa and japan economies and their 57 most important trading partners over the period 1986 1997 our full interaction model finds empirical support for the new trade theory and linder s hypothesis we show that the omission of one or more interaction effects can result in biased estimates and misleading inference

exchange rate uncertainty and us bilateral fresh fruit and fresh vegetable trade an application of the gravity model in order to analyse the effect of exchange rate uncertainty we apply an empirical gravity equation to two sets of us bilateral trade data fresh fruit over the period 1976 1999 for a panel of 26 countries and fresh vegetables over the period 1976 2006 for a panel of nine countries based on panel estimation methods and using both a moving sd measure and the peree and steinherr 1989 measure of exchange rate uncertainty the results show that us bilateral fresh fruit trade has been negatively affected by exchange rate uncertainty we also find some evidence that the exchange rate between the us dollar and the currencies of latin american trading partners accounts for most of the negative impact of exchange rate uncertainty on bilateral trade flows in fresh fruit in contrast when using panel estimation methods and both measures of exchange rate uncertainty we find no statistically significant evidence for any negative effect of exchange rate uncertainty on us bilateral fresh vegetable trade however

is more information always better a case in credit markets this paper studies the impact of behavioral and non behavioral information contained in consumer credit reports on the credit market a repeated game of incomplete information between a borrower and a sequence of lenders is considered lenders beliefs regarding the borrower s type depend on the borrower s historical loan performance and other informative signals it is established that for low beliefs strategic defaults occur in equilibrium as the borrower defaults on his loans despite having the ability to repay them further as the ancillary signals become increasingly informative of the borrower s type the range of beliefs over which strategic defaults occur expands this increase in strategic defaults highlights an unintended negative effect of allowing informative signals to influence beliefs on the upside the informative signals allow lenders to learn the borrower s type more quickly

does the quality of political institutions affect intra industry trade within trade blocs the asean perspective there has been a renewed resolve for deeper integration and cooperation within asean intra industry trade iit is often viewed as a way of achieving economic as well as political integration thi

intra industry trade and strategic interaction theory and evidence abstract we conduct a theory based empirical study of intraindustry trade in homogeneous products we derive an oligopolistic model of intra industry trade which is an extension of the segmented market model of trade initially proposed by brander j a 1981 intra industry trade in identical commodities journal of international economics 11 1 14 the empirical implementations of the model are investigated in the context of the petrochemical industry our analysis employs a unique data set containing detailed product and location specific data on the petrochemical industries in germany and the united states allowing for different empirical specifications we find that cross product variations in bilateral intra industry trade of petrochemicals are well explained by the variables suggested by the theoretical model

factor proportions and the growth of world trade abstract most of the expansion of global trade since 1980 has been of the north south kind between capital abundant developed and labour abundant developing countries based on this observation i argue that the recent growth of world trade is best understood from a factor proportions perspective using data on trade barriers and estimates of capital labour ratios for a group of 45 economies between 1980 and 2008 i find that a calibrated factor proportions model can generate significant trade growth during this period amounting to 90 of the observed rise in north south trade the opening up of china alone accounts for three quarters of the predicted increase in line with the model i present evidence that china s liberalisation has raised the exports and imports of capital abundant countries relative to more labour abundant economies overall my findings suggest that factor proportions theory may be useful for interpreting several quantitative and qualitative aspects of growing world trade in a period during which the group of large open economies has become significantly less homogenous

adaptive data driven inventory control with censored demand based on kaplan meier estimator using the well known product limit form of the kaplan meier estimator from statistics we propose a new class of nonparametric adaptive data driven policies for stochastic inventory control problems we focus on the distribution free newsvendor model with censored demands the assumption is that the demand distribution is not known and there are only sales data available we study the theoretical performance of the new policies and show that for discrete demand distributions they converge almost surely to the set of optimal solutions computational experiments suggest that the new policies converge for general demand distributions not necessarily discrete and demonstrate that they are significantly more robust than previously known policies as a by product of the theoretical analysis we obtain new results on the asymptotic consistency of the kaplan meier estimator for discrete random variables that extend existing work in statistics to the best of our knowledge this is the first application of the kaplan meier estimator within an adaptive optimization algorithm in particular the first application to stochastic inventory control models we believe that this work will lead to additional applications in other domains

monopolistic competition and trade revisited testing the model without testing for gravity abstract in this paper i show that the increasing similarity in gdps among oecd country pairs leads to higher bilateral trade to gdp ratios this finding provides some support for the prediction of helpman j jpn int econ 1 1987 62 whose model explains intra industry trade that is prevalent among developed countries i also show that helpman s prediction is rejected for non oecd countries among which intra industry trade is not critical this result contrasts with the findings of hummels levinsohn q j econ 110 1995 799 which play an important role in the debate about whether or not new trade theory explains international trade patterns at the country level

impact of market demand mis specification on a two level supply chain this paper investigates the impact of mis specifying the market demand process on a serially linked two level supply chain box jenkins models are used to represent both the true and a mis specified market demand processes it is shown that the impact of mis specification on cost is minor if the supply chain tries to minimise the market demand forecast errors furthermore our analysis suggests that mis specification does not always result in additional costs a managerial insight is revealed poor forecast accuracy is not always bad for the total supply chain costs in other words employing more accurate forecasting methods may actually result in higher total supply chain costs

regional integration and trade controlling for varying degrees of heterogeneity in the gravity model using a panel dataset of bilateral export flows from 12 eu countries to 20 oecd trading partners over the 1992 2003 period this paper examines whether the effect on trade of european regional integration denoted by an eu dummy holds across a representative number of specifications for two gravity models one based on the traditional trade determinants the other based on newer trade theories ntt for both gravity model specifications the coefficient of the eu dummy declines in magnitude and becomes insignificant as an increasing degree of country heterogeneity is admitted into the model this suggests the fundamental importance of the econometric specification when evaluating trade policy effects

the impact of iso 9000 diffusion on trade and fdi a new institutional analysis the effects of iso 9000 diffusion on trade and foreign direct investment fdi have gone understudied we employ panel data reported by oecd nations over the 1995 2002 period to estimate the impact of iso adoptions on country pair economic relations we find iso diffusion to have no effect in developed nations but to positively pull fdi i e enhancing inward fdi and positively push trade i e enhancing exports in developing nations

information sharing in credit markets we present a model with adverse selection where information sharing between lenders arises endogenously lenders incentives to share information about borrowers are positively related to the mobility and heterogeneity of borrowers to the size of the credit market and to advances in information technology such incentives are instead reduced by the fear of competition from potential entrants in addition information sharing increases the volume of lending when adverse selection is so severe that safe borrowers drop out of the market these predictions are supported by international and historical evidence in the context of the consumer credit market a large body of literature on credit markets has shown that asymmetric information may prevent the efficient allocation of lending leading to credit rationing e g jaffee and russell 1976 stiglitz and weiss 1981 or to a wedge between lending and borrowing rates e g king 1986 in this literature informational asymmetries are taken to be exogenous lenders fail to observe some relevant characteristic or action of potential borrowers and have no way of learning about it in some countries however lenders can improve their knowledge about new customers by exchanging information with other lenders through information brokers generally known as credit bureaus the latter collect file and distribute the information voluntarily supplied by their members and operate on the principle of reciprocity lenders who do not provide data are denied access to the bureau s files in other countries instead these institutions do not exist the literature offers no guide to identify the factors that lead to endogenous communication between lenders this paper is an attempt to fill the gap information sharing is important for a number of reasons it may increase the degree of competitiveness within credit markets vives 1990 improve

assessing the trade impact of the european neighbourhood policy on the eu med free trade area the european neighbourhood policy enp set an additional objective for the southern mediterranean countries smcs the prospect of a stake in the internal market the launch of this new policy has been the occasion for a revival of empirical studies aimed at assessing the impact of the eu med partnership on bilateral trade the novelty of this work is twofold i to present nonparametric matching estimators besides gravity estimates ii to assume as a counterfactual of the treatment the ex post long run average treatment effects of the europe agreements by controlling for likely selection bias and country and time heterogeneity using both qualitative and quantitative measures of the policy variable we assess ex post the trade enhancing impact of the eu preferential agreements towards smcs and ex ante the actual efficacy of the enp

the data driven newsvendor with censored demand observations motivated by data from a large european retail chain we tackle the newsvendor problem with censored demand observations by a distribution free approach based on a data driven approach for this purpose we extend the model introduced in chap 3 to improve the forecast accuracy we simultaneously estimate unobservable lost sales determine the coefficients of the exogenous variables which drive demand and calculate the optimal order quantity since demand exceeding supply cannot be recorded we use the timing of hourly sales occurrences to establish daily sales patterns these sales patterns allow conclusions on the amount of unsatisfied demand and thus the true customer demand to determine the coefficients of the inventory function we formulate a linear programming model that balances inventory holding and penalty costs based on the censored demand observations in a numerical study with data generated from the normal and the negative binomial distribution we compare our model with other parametric and non parametric estimation approaches we evaluate the performance in terms of inventory and service level for non price dependent demands and different censoring levels we find that the data driven newsvendor model copes especially well with highly censored data and price dependent demand in most settings with price dependent demand it achieves similar or higher service levels by holding lower inventories than other benchmark approaches from the literature finally we show that the non parametric approaches are better than the parametric ones based on real data with several exogenous variables where the true demand distribution is unknown

is environmental efficiency trade inducing or trade hindering abstract global efforts to identify strategies for sustainable economic growth and development underline the need for understanding important links between environmental policies and international trade in this paper by constructing an environmental efficiency index for 111 countries from 1980 to 2009 we are able to empirically test for one such link an improvement in the environmental efficiency index in terms of carbon dioxide emissions reflects a decrease in the cost of efforts to mitigate the environmental costs associated with growth countries that improve their environmental efficiency are found to experience strong international trade effects both through increased exports and increased imports while the positive link between efficiency improvements and exports is supportive of the porter hypothesis the positive link between efficiency improvements and imports is supportive of strong positive income effects on account of environmental efforts these results which are robust to alternative estimation strategies lend strong support to global efforts to improve countries environmental efficiencies

how larger demand variability may lead to lower costs in the newsvendor problem in this paper we consider the newsvendor problem intuition may lead to the hypothesis that in this stochastic inventory problem a higher demand variability results in larger variances and in higher costs in a recent paper song 1994a has proved that the intuition is correct for many demand distributions that are commonly used in practice such as for the normal distribution function however this paper shows that there exist demand distributions for which the intuition is misleading i e for which larger variances occur in combination with lower costs to characterize these demand distributions we use stochastic dominance relations

optimal ordering discounting and pricing in the single period problem abstract the single period problem spp also known as the newsboy or newsvendor problem is to find the order quantity which maximizes the expected profit in a single period probabilistic demand framework previous extensions to the spp include in separate models the simultaneous determination of the optimal price and quantity when demand is price dependent and the determination of the optimal order quantity when progressive discounts with preset prices are used to sell excess inventory in this paper we extend the spp to the case in which demand is price dependent and multiple discounts with prices under the control of the newsvendor are used to sell excess inventory first we develop two algorithms for determining the optimal number of discounts under fixed discounting cost for a given order quantity and realization of demand then we identify the optimal order quantity before any demand is realized we also analyze the joint determination of the order quantity and initial price we illustrate the models and provide some insights using numerical examples

environmental regulation and the export dynamics of energy technologies abstract the pollution haven hypothesis affirms that an open market regime will encourage the flow of low technology polluting industries toward developing countries because of potential comparative advantages related to low environmental standards in contrast the hypothesis suggested by porter and van der linde claims that innovating firms operate in a dynamic competitive situation which allows global diffusion of environmental friendly technologies environmental regulation may represent a relevant mechanism through which technological change is induced in this way countries that are subject to more stringent environmental regulations may become net exporters of environmental technologies this paper provides new evidence on the evolution of export flows of environmental technologies across different countries for the energy sector advanced economies particularly the european union have increasingly focused on the role of energy policies as tools for sustaining the development path the kyoto protocol commitments together with growing import dependence on energy products have brought attention to the analysis of innovation processes in this specific sector the analysis uses a gravity model in order to test the determinants and the transmission channels through which environmental technologies for renewable energies and energy efficiency are exported to advanced and developing countries our results are consistent with the porter and van der linde hypothesis where environmental regulation represents a significant source of comparative advantages what strongly emerges is that the stringency of environmental regulation supplemented by the strength of the national innovation system is a crucial driver of export performance in the field of energy technologies

intra tourism trade income distribution and tourism endowment an econometric investigation empirical investigation nowak et al 2012 points out that vertical intra industry trade viit in europe is the dominant type of intra industry trade iit in the tourism sector this article is the first in tourism literature to test separately the determinants of vertically and horizontally differentiated services using the most recent models in the theory of iit we examine bilateral trade among all trading partners of the sample of european countries covering the period from 2000 to 2008 we show that differences in gross domestic product per capita and the income distribution overlap as well as cultural proximity are the most significant driving forces behind viit for european countries geographic distance has a negative effect whereas specific tourism endowments and relative size of the economies are less conclusive these results confirm theory predictions and most of the empirical findings related to the pattern of viit for the manufacturing sector as expected we find that determinants

product differentiation competition and international trade in this paper the two workhorse theories of international trade under imper fect competition krugman s taste for variety model and brander s strategic intra industry trade model are integrated into a single analytical framework a quadratic utility function allows for a nesting of these two theories by postulating a consumer taste for variety over differentiated products where the extent of product differentiation is linked to the intensity of strategic interaction among firms the model yields intuitive predictions on the effects of the degree of product differentiation on the volume of trade and on the composition of the gains from trade under imperfect competition jel classifi cation f12

a quick and easy method for estimating switching costs abstract i develop and test a method for a quick and easy calculation of consumer switching costs among brands in a given industry the theory developed and tested here maps observed brands prices and market shares onto the switching costs which deter a consumer of a specific brand from switching to any other competing brand then i demonstrate how users switching costs can be directly calculated in two different industries a the israeli cellular phone market and b the finnish market for bank deposits this calculation method can be used to calculate switching costs in a wide variety of other industries such as airlines health services computers software telecommunications and more

a new approach to the allocation of aid among developing countries is the usa different from the rest summary this paper attempts to explain the factors that determine the geographical allocation of foreign aid its novelty is that it develops a rigorous theoretical model and conducts the corresponding empirical investigations based on a large panel dataset we run regressions for different major donors united states canada france italy japan united kingdom and multilateral organizations with the explicit objective of establishing whether the united states in light of its geopolitical hegemony behaves differently from others we find that all the donors respond to recipient need in their allocation of aid but that the united states puts less emphasis on this than the other donors with the exception of japan we also find that the united states puts more emphasis on donor recipient linkages than do the other donors suggesting that the united states attaches greater importance to issues of donor interest for example geopolitical commercial and other links with specific recipients

import diversification along the growth path abstract we provide evidence showing that the degree of diversification of import sources of finely disaggregated commodities rises monotonically along the growth path this result is robust to different measures of import diversification and the inclusion of a large set of additional control variables in addition we show the process of rising import diversification takes place as countries gradually increase their spending shares in imports originating from relatively distant exporters

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

on the impact of transportation costs on trade in a multilateral world this article proposes to account for the differences in the importance of transport costs depending on characteristics of trading partners in a multiregion model of trade in differentiated goods we expect a smaller impact of transport costs on a country s exports as a share of importer gross domestic product gdp the more less relatively capital abundant the exporter importer is and the lower higher production costs are as captured by gdp at given factor endowments and diversity all else equal empirically this requires four interaction terms in addition to the direct impact of transport costs when estimating log linear gravity models one with the exporter gdp per capita or capital labor ratio a second one with the importer gdp per capita or capital labor ratio and a third and fourth with exporter and importer gdp respectively the hypotheses are strongly supported by the evidence from a large panel of bilateral trade between 1970 and 2000

risk sharing and industrial specialization regional and international evidence the authors provide empirical evidence that risk sharing enhances specialization in production to the best of their knowledge this well established and important theoretical proposition has not been tested before the empirical procedure is summarized as follows first the authors construct a measure of specialization in production and calculate an index of specialization for each of the european community ec and non ec oecd countries u s states canadian provinces japanese prefectures latin american countries and regions of italy spain and the united kingdom then they estimate the degree of capital market integration a measure of risk sharing within each of these groups of regions the ec countries the non ec oecd countries the united states canada japan italy spain and the united kingdom and rely on another author s estimate for latin america finally they perform a regression of the specialization index on the degree of risk sharing controlling for relevant economic variables they find a positive and significant relation between the degree of specialization of individual members of a group of countries provinces states or prefectures and the amount of risk that is shared within the group the authors perform regressions using variables such as shareholder rights and the size of the financial sector relative to gdp as instruments for the amount of inter regional risk sharing these regressions confirm that risk sharing facilitated by a favorable legal environment and a developed financial system is a direct causal determinant of industrial specialization this abstract was borrowed from another version of this item

international standards and international trade empirical evidence from iso 9000 diffusion abstract empirical scholarship on the standards trade relationship has been held up due to methodological challenges measurement varied effects and endogeneity considering the trade effects of one particular standard iso 9000 we surmount methodological challenges by measuring standardization via national penetration of iso 9000 allowing standardization to manifest via multiple quality signaling information compliance cost and common language channels and using instrumental variable multilateral resistance and panel data techniques to overcome endogeneity we find evidence of common language and quality signaling augmenting country pair trade yet iso rich nations benefit the most from standardization while iso poor nations find iso 9000 to represent a trade barrier due to compliance cost effects

the long run decline in the share of agricultural and food products in international trade a gravity equation approach to its causes the objective of this study is to determine the causes of the loss of share of agricultural products and food in international trade the article compares using a gravity model the impact of various factors upon bilateral trade in agricultural products in manufactures and in total trade between 1963 and 2000 for a representative sample of 40 countries the results clearly demonstrate how the low demand elasticity for agricultural products and food the high degree of protectionism to which they were subjected and their meagre share in intra industrial trade are the principal causes of their relatively slow growth