a critical assessment of some neo marxian trade theories the neo marxian unequal exchange literature has been largely bypassed in mainstream discussions of theories of comparative advantage during the 1970s in so far as the unequal exchange literature attempts to explain international factor price non equalisation for labour the problems addressed are of more general relevance in my work on this topic i have attempted to distinguish between studies within a classical marxian tradition some of which have been recently written and those neo marxian writers whose work is more broadly compatible with the sraffa or neo ricardian analysis of comparative advantage the purpose of this paper is to survey the latter sub set of the neo marxian literature not only because of its importance in many discussions of third world issues but also because of its own intrinsic merits

effects of cost changes on oligopolists profits this paper considers cost changes affecting all firms in a constantreturns to scale cournot oligopoly cost increases may paradoxically benefit some or even all firms whether a firm benefits or is harmed depends only on whether its market share exceeds a threshold level s on whether industry costs increase or decrease on the number of firms and on the elasticity of the demand curve s slope or equivalently the fraction of cost changes that are passed on conditions where industry structure alone determines the effect of cost changes on firms profits and conditions where cost increases necessarily harm some firms are developed this paper considers the effects of a change in cost on outputs and profits in an industry composed of firms with constant returns to scale these effects are easy to see in the extreme cases of monopoly and perfect competition but

excise taxes with multiproduct transactions i examine excise taxes levied on multiproduct retailers excise taxes reduce equilibrium output and decrease equilibrium product variety in the short run but taxes can raise output per product in the long run and induce entry excise taxes are overshifted into prices in a wide range of cases including under linear and concave demand conditions and excise taxes shift less than one for one into prices only when demand is highly convex multiproduct transactions substantively alter the efficiency of ad valorem and specific forms of excise taxes and affect the comparison of relative tax performance over short run and long run time horizons jel h25 h32 l11 l13 l81

vertical trading and uneven development abstract the phenomenon of vertical trading in which the center exports a good involving a high degree of processing which leads to economy wide learning and the periphery exports a good which does not generate such effects is formalized in a simple dynamic model of trade it is shown that the periphery can lose from such trade relations conditions under which this can occur are shown to involve parameters of the learning functions and the sizes of the two countries

ricardo s international trade theory beyond the comparative cost example that the labour embodied in the export goods given in exchange for one unit of the imported good is less than the labour which the country would have to utilise if it itself were to produce one unit of the imported good there is no question that this ricardian model based on the example of england and portugal trading cloth for wine in chapter 7 of ricardo s principles of political economy and taxation 1951a is an excellent pedagogical device to illustrate the role of compara tive advantage in determining a country s trade pattern and the resulting gains from trade ricardo showed that trade enhances a country s welfare even though it may be more efficient than its trading partner in producing each of its commodities as long as its relative productivity advantage differs between them the principle of comparative advantage

does the market deliver the right technology abstract we show that the market does not systematically deliver the right technology under monopolistic competition i firms might rush on large scale technology pushing to the exit many desirable varieties produced by small firms ii firms might shun large scale technology though that technology would benefit the society through lower prices iii a bias towards small scale technology in some stage of development and a bias towards large scale technology in another stage is also a possibility

on vertical control in monopolistic competition abstract this paper demonstrates that vertical restraints are profitably imposed by a manufacturer or wholesaler who has some market power and whose product is sold in a monopolistically competitive downstream market simple conditions are developed under which a price floor resale price maintenance or a price ceiling is profitable and under which private incentive for a restraint is sufficient for its social desirability where demand elasticities are constant observed vertical price floors are always welfare improving but profitable price ceilings may decrease welfare in the special case of the ces aggregate surplus specification with competitive conjectures price ceilings are profitable and welfare decreasing

regulation in the european community all governments regulate economic activity in their own countries the single european market will involve a significant transfer of regulatory activity from member states to the european community as well as the initiation of regulatory activity in certain areas that have not previously been subject to regulation at all including the activities of member states themselves as in taxation or the provision of subsidies to industry why should governments wish to make such a transfer of powers what do they have to gain

the path of price changes in vertical integration the paper examines the path of final good price changes when a monopoly supplier of an intermediate good vertically integrates into a competitive constant returns final good industry i show that the price rises while the monopolist is taking over the downstream industry and then falls after downstream monopolization is complete the relationship of these results to the existing literature on full forward integration is established

aggregation and social choice a mean voter theorem a celebrated result of black 1948a demonstrates the existence of a simple majority winner when preferences are single peaked the social choice follows the preferences of the median voter the median voter s most preferred outcome beats any alternative however this conclusion does not extend to elections in which candidates differ in more than one dimension this paper provides a multi dimensional analog of the median voter result we provide conditions under which the mean voter s most preferred outcome is unbeatable according to a 64 majority rule the conditions supporting this result represent a significant generalization of caplin and nalebuff 1988 the proof of our mean voter result uses a mathematical aggregation theorem due to prekopa 1971 1973 and borell 1975 this theorem has broad applications in economics an application to the distribution of income is described at the end of this paper results on imperfect competition are presented in the companion paper caplin and nalebuff 1991

developmental states and socialist industrialisation in the third world development economics as a discipline and the idea of the state as the organiser of economic activity are inseparable basic concepts and distinctions are put forward to unravel the complex question of the role of the state in the industrialisation process these are then used to examine the state in three waves of socialist industrialisation which shows a strong capacity to mobilise and direct economic social and political resources the typically pervasive state may however outlive its historically progressive role and become a bastion of economic irrationality and political authoritarianism

on the transformation of theorems abstract professor w ethier 1979 has argued that replacing land by capital in the familiar 2 2 trade model leaves the four basic theorems unaffected with time phasing and a positive interest rate in fact ethier s hos and fpe theorems are different in kind from the traditional ones the traditional theorems predict certain results in terms of trade independent data ethier s theorems describe equilibrium in terms of factor endowments and intensities defined by equilibrium prices hence his theorems do not support his central message that nothing is lost in trade theory by treating capital as if it were homogeneous land

free entry and social efficiency under vertical oligopoly we analyze a successive vertical oligopoly model that incorporates vertical relationships between industries and demonstrate that free entry in an industry that produces a homogeneous product can lead to a socially insufficient number of firms this is in contrast with the proevious findings that under cournot oligopoloy with fixed set up costs level of entry in the free entry equilibrium is socially excessive it has often been argued that this result can provide a justification for apparently anticompetitive entry regulations our finding yields an important policy implication that such a justification is not necessarily valid when vertical relationships ar taken into account

free entry and social inefficiency our goal is to provide a simple yet general exposition of the conditions under which the number of entrants in a free entry equilibrium is excessive insufficient or optimal our analysis compares the number of firms that enter a market when there is free entry with the number that would be desired by a social planner who is unable to control the behavior of firms once they are in the market that is we consider the second best problem of choosing the welfare maximizing number of firms while we take as given their noncompetitive behavior after entry we demonstrate that the crucial conditions for establishing the presence of an entry bias can be stated quite simply in terms of the outcome of the postentry game played by entrants in contrast to previous work we do not need to model this postentry game explicitly

comparative statics for oligopoly a generalized result we perform comparative statics for a general model of asymmetric oligopoly and derive a concise formula for the response of one firm to a marginal change in its rival s strategic variable taking into account the responses of all other firms we obtain the conditions under which the sign of this response coincides with that of the mixed second order partial derivative of the firm s payoff function we then propose a distinction between gross and net strategic relationships i e strategic substitute and complement

the international context for industrialisation in the coming decade export orientated industrialisation strategies are currently in vogue whether as an active choice by ldcs or as a consequence of pressure from the imf and the world bank the attractiveness of these strategies stems from the historic success of the nics particularly south korea taiwan singapore and hong kong yet there are signs that the changing nature of the global economy will have a major impact on industrialisation in peripheral economies and in particular on eoi strategies this paper focuses on four aspects of this changing international climate restricted market access radical electronics based technical change the nature of the structural adjustment programmes enforced by the imf and the world bank and the effect of increased military expenditures in the third world

vertical integration in a monopolistically competitive industry abstract this paper considers forward vertical integration by a monopolist producer of an intermediate good when the downstream industry is monopolistically competitive alternative methods of vertical control are considered in addition to the usual input mark up these include franchise fees royalties and resale price maintenance it is found that these methods in combination achieve perfect or near perfect replication of the outcome under full vertical integration the case where downstream products are differentiated by location in a circular space is studied in detail and alternative outcomes are ranked according to their social desirability

from stationary state to endogenous growth international trade in the mathematical formulation of the ricardian system in his 1814 15 correspondence with malthus and in his essay on profits ricardo championed the free importation of wage goods as a highly effective growth enhancing policy in order to capture this aspect in the mathematical formulation of the ricardian system first introduced by pasinetti in 1960 in the context of a closed economy we produce a variant of that model where the economy is a small open one we show that this economy is characterised by endogenous growth since the growth rate is bounded from below and we locate two thresholds concerning the allocation of labour among the two sectors of the economy and the pattern of international trade

capital budgeting under uncertainty an extended goal programming approach mathematical programming techniques have long been recognized as the most suitable approach to the complex problem of capital budgeting in corporations this is because contrary to conventional single project appraisal techniques such as the net present value method financial planners do not normally engage in project by project analysis to determine the projects that would be included in capital budgets in addition the existing chance constrained both single and multiple objectives models developed to deal with the problem of uncertainty in capital budgeting are grossly defective since they indeed address the problem of risk rather than uncertainty this paper presents an extended goal programming methodology to address the problem of capital budgeting under uncertainty to overcome the defects of chance constrained capital budgeting models in particular since financial planners frequently deal with the complex problem of capital budgeting by aggregating large numbers of small investment proposals into families of large projects the paper presents necessary and sufficient conditions for the acceptance of a set of investment projects by a business enterprise the results indicate that under uncertainty firms faced with capital rationing are less economically efficient than others that are not so faced also the results show that optimal allocation policy under uncertainty requires the actual discount rate to be greater than the market cost of capital a finding which is consistent with corporate finance practice

how would david ricardo have taught the principle of comparative advantage author affiliation andrea maneschi vanderbilt university department of economics nashville tn 37235 usa andrea maneschi vanderbilt edu acknowledgment the present version of this paper has benefitted from the perceptive comments of two anonymous referees for comments and advice on previous versions i am grateful to eric bond mario crucini daniel diatkine roger sandilands bertram schefold and philippe steiner 1 introductionassume that david ricardo s life had extended beyond the age of 51 that he became a professor of political economy in his later years and was invited to lecture on comparative advantage 1 against all odds he displays a remarkable intuition of future developments in economic theory and is able to use the standard tools and graphical techniques found in present day economics textbooks in his lecture ricardo recalls the numerical example contained in his principles of political economy and taxation ricardo 1951b chapter 7 where cloth and wine are traded between england and portugal he reminds his audience that england s exports of cloth embody the labor of 100 men whereas 120 men would be needed to produce its wine imports the corresponding numbers for portugal are 80 for wine exports and 90 for cloth imports england s comparative advantage in cloth is explicitly implied by the numbers 100 and 120 pertaining to its two traded commodities even before ricardo mentions the corresponding numbers for portugal because the amounts of portuguese labor associated with the quantities of wine and cloth actually traded are lower than those of english labor portugal has an absolute advantage in producing both commodities however the fact that 80 120 2this paper aims to present ricardo s illustration of the gains from trade in both algebraic and graphical form using first a linear then a nonlinear model of production section 2 shows how ricardo makes a gradual transition to a complete trade model by quantifying the gains from trade as the amount of labor saved by trade in the case where the two countries transformation curves happen to be linear in section 3 he generalizes his illustration of the gains from trade by using a concave transformation curve in section 4 ricardo proves that the liberalization of trade in wheat raises england s profit rate and reduces rental income and shows these results diagrammatically this effect on profits neglected by contemporary trade textbooks is the second main source of gains from trade section 5 concludes that the resulting representation of the gains from trade does greater justice to ricardo s original trade model than that found in most textbooks 2 the linear ricardian modelafter his painstaking elaboration of diminishing returns to labor leading to the theory of rent in chapter 2 of his principles ricardo would have had little reason to argue that an economy s production possibility frontier is a straight line choosing instead a production structure marked by diminishing returns to labor in agriculture that lead to a concave transformation curve however in this lecture he decides for pedagogical reasons to make a gradual transition to the latter by starting as a temporary working hypothesis with the linear ricardian production model familiar to students of present day textbooks consider the production possibility line be in the left hand quadrant of figure 1 where the horizontal axis measures the quantity of cloth to the left of the origin o and the vertical axis that of wine in the right hand quadrant the horizontal axis measures the workforce in the wine sector lw given a constant labor coefficient in wine production the linear production function oq shows wine output as a function of lw

the true meaning of david ricardo s four magic numbers abstract the four numbers in david ricardo s example of comparative advantage have been traditionally interpreted as unit labor coefficients in the production of wine and cloth in uk and portugal a recent interpretation suggests that they represent instead the labor needed to produce the amounts of wine and cloth actually traded ricardo s four numbers are shown to yield each country s gains from trade by simply subtracting two of the numbers from the other two since the numbers also indicate each country s comparative advantage ricardo established a close connection between comparative advantage and the gains from trade

the role of reserves and production in the market capitalization of oil and gas companies abstract we examine the role proved reserves and production play in the market capitalization of publicly traded oil and gas companies engaged in the exploration and production of hydrocarbons the paper provides two important contributions to the literature first we extend the existing research by utilizing the method of robust least squares to estimate a multivariate market capitalization model that controls for firm type second we document the impacts that oil and gas reserves to production ratios have on market capitalization this is a key finding in the context of discounted net cash flow models and the findings suggest there is an optimal tradeoff between current and future production given current volumes of reserves the latter of which is valued positively by the market moreover this optimal tradeoff or the optimal profit maximizing intertemporal production choice is unique to the type of hydrocarbon being considered additionally our findings highlight the importance of capital structure in the heavily capital intensive oil and gas industry the results from this research should benefit both oil and gas companies and investors specifically the results provide new and robust information as to the empirical relationships between key determinants of oil and gas company market valuations

excess entry vertical integration and welfare this article provides a systematic analysis of the welfare effects of vertical integration by a monopolist input supplier into a monopolistically competitive downstream industry we give sufficient conditions on consumer preferences that lead to pareto improving vertical integration and demonstrate a close relationship between assumptions on preference for variety excess entry in monopolistically competitive markets and the welfare effects of vertical integration excess entry in downstream markets tends to give rise to pareto improving vertical integration we extend the analysis to vertical oligopoly and access price regulation

concentration product variety and entry for merger evidence from new product introductions in the u s food industry competing theories in industrial organization predict that more concentrated industries will lead to a smaller and more efficient variety of products or alternately a larger and less efficient array of products this paper presents an empirical study of these competing implications that estimates the impact of market concentration on new product introductions in a panel of nine food processing industries over 1983 to 2004 controlling for industry level unobservables using fixed effects and endogeneity of industry market structure we find that industry concentration promotes the introduction of new products preliminary evidence also suggests that new product introductions spur subsequent food industry mergers both conclusions are consistent with the entry for merger theory of product variety wherein small firms introduce new products in anticipation of profitable future mergers with concentrated firms

opec behavior a test of alternative hypotheses since interpretations of past and future oil price patterns depends on the model chosen the author tests and compares alternative theories of opec as a first step in validating the choice on any one model the results show that among opec countries the partial market sharing cartel model is the only model not rejected by at least some of the 11 members and gives the best explanation of production in comparison with 11 non opec countries the competitive model could not be rejected for 10 of the 11 non opec producers this raises the question of why if opec is a cartel friedman s predictions have not come true and introduces new questions for future research 19 references 3 tables

resale price maintenance and forward integration into a monopolistically competitive industry in this paper we adopt the ces model of product differentiation for the downstream stage of the industry with an upstream monopolist we first show that resale price maintenance is equivalent to forward integration and that both increase profits then we demonstrate that forward integration by an upstream monopolist will reduce welfare for the industry prices fall with forward integration but the integrating firm contracts the number of downstream subsidiaries so drastically that the reduced diversity more than offsets the gains from lower prices

the market selects the wrong firms in the long run we consider the effects of free entry on the market structure and social welfare of an asymmetric cournot oligopoly even if we allow for the existence of different types of firms initially only one type in almost all cases can survive in the long run free entry leads an economy to a symmetric equilibrium in which the excess entry theorem holds further we consider the socially optimal policy for this economy in cases of either i a concave demand which implies strategic substitutability or ii strategic complementarity which implies a convex demand the type of firms that should remain in the market to achieve social optimality does not necessarily coincide with the type of firms that will survive in the long run the market may select not only the wrong number of firms but also the wrong type of firms in the long run

diversity and ignorance in electricity supply investment addressing the solution rather than the problem the need for diversity has been cited as a rationale for important recent investment decisions in the uk electricity supply sector it is invoked as the principal argument for continuing major government intervention yet there exists no formal analytical basis for the concept why is diversity good what is meant by diversification what is it that must be diversified what trade off should be struck between diversity and other measures of performance the resulting ambiguity causes confusion and is vulnerable to special pleading despite this this paper argues that diversification offers a superior alternative to probabilistic approaches towards uncertainty and ignorance in electricity supply investments and proposes a formal analytical approach a quantitative index of diversity is borrowed from information theory and used to derive a value for the government s implicit willingness to pay for diversity in the uk electricity supply mix this is then applied in a pilot exercise to the problem of optimizing the diversity and financial performance of the supply portfolio although provisional the results are relevant to the government s forthcoming nuclear review particularly in assessing the relative levels of support for nuclear power and renewable energy

entry barriers and economic welfare the relationship between economic welfare and the number of firms in a quasi cournot market is examined in the first place we presuppose the existence of a strong first best government that can enforce the marginal cost principle to the firms along with regulating the number of firms it is shown that there exist excessive number of firms at the free entry quasicournot equilibrium vis a vis the first best welfare maximizing number of firms the thrust of this result essentially survives even if we replace a utopian first best government by a secondbest government that leaves the firms to pursue their respective profit maximization freely and engages solely in regulating the number of firms it can be shown that the excess entry prevails again in this second best world recent studies in the theoretical industrial organization literature have uncovered several instances which cast serious doubt on the reasonableness of a widespread belief that increasing competition will increase welfare stiglitz 1981 p 184 it has been shown that there are cases which are not altogether unreasonable where social welfare will be increased by strengthening rather than weakening the protection of incumbent firms from the threat of potential entry this is in sharp contrast with the traditional belief 2 what is not known however is how robust these pathologies in fact are we intend to settle this problem by proving two excess entry theorems in the quasi cournot parametric conjectural variations homogeneous oligopoly model seade 1980a b in the first place we presuppose the existence of a strong first best government that could costlessly enforce the marginal cost pricing principle by firms in an oligopolistic market and regulate entry in pursuit of first best social welfare optimization it is shown that the number of firms at the free entry equilibrium exceeds the first best welfare optimizing number of firms the result has already been noted by von weizsacker 1980a b and others in terms of numerical examples our theorem 1 asserts that this phenomenon always holds true for the family of quasi cournot models at hand an implication of this result is that the existence of entry barriers which protect incumbent firms from potential competitors is not necessarily welfare decreasing in sharp contrast with the traditional belief a problem remains with theorem 1 however in that an omnipotent first best government does not exist in reality and the first best ideal is unrealizable in the actual economy therefore even if the intervention by a first best government with a view to restricting the number of firms within an industry may be welfare improving it does

technical change and the profit rate a simple proof of the okishio theorem this note presents a simple geometrical proof of okishio s celebrated theorem on the falling rate of profit okishio 1961 my intent is simply to clarify how okishio s theorem works i will thus refrain from comment on the general debate on the falling rate of profit in marxian economics on the limits of the general linear model used here or on the importance and range of applicability of okishio s contribution to those unfamiliar with the general linear model and the frobenius theorems used here i recommend reference to brody 1970 or pasinetti 1977 the essential economic assumptions underlying the following proof are that there are no scarce non produced means of production no land that each industry produces a single product no joint products that labour is homogeneous and that there are no fixed capital goods the period of production of all goods and the turnover time of all capital goods is one period these are okishio s assumptions recent contributions those of roemer 1979 for example have generalized okishio s result somewhat using the usual notation i will let

welfare effects of entry into markets with switching costs in many markets consumers have costs of switching between products that are functionally identical this note shows that entry of efficient low cost competitors into these markets may be socially detrimental in a linear model entry reduces social welfare as conventionally defined in more than half of the relevant parameter space in a more general model there is always a range of values of switching costs for which entry reduces welfare even if the entrant s production costs are lower than the incumbent s copyright 1988 by blackwell publishing ltd

monopoly power and uneven development baran revisited baran examined the implications of the rise in monopoly power in advanced economies for the underdevelopment in poor countries and the process of uneven development on a world scale this article examines his work critically and then presents a north south model which defines uneven development in a precise manner and analyses the mechanism by which the rise in monopoly power leads to such uneven development it is shown that the process can work even without reference to imperialism which is a central but controversial element in baran s analysis

strategic policy and the logistics of crude oil transit in lithuania this paper examines the crude oil transit market in lithuania and the significant economic and political role played by russia beginning with an analysis of the strategic and political role played by crude oil in lithuania there follows a discussion of the policies followed by the lithuanian authorities following independence in 1992 from the former soviet union a content analysis approach is taken to establishing the main policy issues that dominate the sector this technique combines both quantitative and qualitative approaches to a review of published material on oil transit in lithuania and acts as a means of assessing expert opinion on the issues involved the results from this analysis will be used in developing policy initiatives for the sector the paper ends with some suggestions for further applications of the techniques used to oil transit policy issues in the region

financialisation and the dynamics of offshoring in the usa imports are linked to higher cost mark ups and firm profits and the gains from such non competitive imports the result of offshoring are increasingly associated with the reinvestment of these higher profits our regression analysis of 35 us manufacturing and service industries over the period 1998 2006 supports aggregate and firm level studies showing that offshoring is associated with a higher share of corporate profit in total value added but the dynamic gains from offshoring have not been fully realised because firms have purchased financial assets especially share buybacks and higher dividend payments to raise shareholder value rather than investing in productive assets that raise productivity growth employment and income despite the corporate sector s contribution to national savings over the past decade the offshoring financialisation linkage reduces the capacity of non financial corporations to act as a driver of the recovery from the economic crisis that emerged in 2008

oligopolistic competition and the optimal provision of products this paper considers the theory of market versus optimal product diversity in the light of two recent advances in oligopoly theory the first is the development of discrete choice models to describe heterogeneous consumer tastes and the application of such models to oligopolistic competition the second advance is the proof that logconcavity of the consumer taste density guarantees the existence of a price equilibrium we analyze an oligopoly model with price competition and free entry taking explicit account of the integer constraint under the chamberlinian symmetry assumption that tastes are i i d we first show that logconcavity of the taste density implies there is excessive market provision of variety when each consumer buys one unit of the product from one of the firms we then show that this result extends to price sensitive individual demands by proving that the equilibrium number of firms is at least as great as that which would be provided at the second best social optimum subject to a zero profit constraint for firms our results call into question previous findings for representative consumer models that left open the possibility of insufficient product diversity

state structure and economic adjustment of the east asian newly industrializing countries an analysis of the economic adjustment policies of hong kong singapore south korea and taiwan during the 1970s and 1980s shows that these east asian newly industrializing countries nics which faced common problems in sustaining their recent industrial growth responded to the challenge with industrial adjustment strategies that differed in their degree of intensity of state involvement and emphasis on national control to explain this divergence in adjustment strategies the article explores the variations in the national political structures of the four nics and focuses particularly on three aspects of state structure the organization of the economic bureaucracy the institutional links between the state and private sector and the larger state society relations the article demonstrates the usefulness of moving beyond the generalizations of the developmental state view by carefully disaggregating these aspects of state structure and by exploring the ordering logic that gives coherence to them

rethinking classical trade analyses within a framework of capitalist development a classical trade theory which comprises smith s productivity theory ricardo s reasoning against the corn laws torrens s argument for extended colonisation and mill s recommendation to send capital abroad is advanced it portrays england s economic expansion in the nineteenth century lacunae exist however because of these economists belief in the automatic spread of industries to the agricultural countries and their inattention to the economic advances made by the late coming capitalist countries as well as the impact of england s capital exports on the capital importing countries subsequent researches which address these and which relate to current debates on theories and policies are discussed 1996 academic press limited

together at last trade costs demand structure and welfare abstract we show that relaxing the assumption of ces preferences in monopolistic competition has surprising implications when trade is restricted integrated and segmented markets behave differentl

helping minor firms reduces welfare the effect on national welfare of uneven technical progress and eli mination of a firm is analyzed under the existence of a cournot oligopolistic sector an increase in the share of an inefficient firm owing to its innovations results in a shift of production from more efficient firms to the inefficient firm causing a less efficie nt allocation of production it may decrease welfare even though the innovation itself is beneficial conversely policies keeping ineffic ient firms from innovations or eliminating them may increase welfare though they make the market structure more oligopolistic copyright 1988 by royal economic society

trade industrialisation and the visible hand the paper examines the neo classical case for the export orientated industrialisation strategy questioning not only its representation of what has occurred in the newly industrialising countries but also raising some doubts about the validity of the analytical model which is implicit in its policy prescriptions an alternative analytical framework and political economy model is then sketched out the experience of south korea and taiwan is used for illustrative purposes highlighting areas where further conceptual and empirical analysis is required to give a fully blown alternative story an appendix offers a brief summary and critique of some recent neo classical work on the relationship between price distortion and growth

new developments in trade theory and ldcs abstract this paper surveys the new literature on international trade relevant to the north south controversy in the first part two types of north south models are considered the unequal exchange theory of lewis and emmanuel and the models of dynamic interaction of findlay taylor and others the analysis focuses on the determinants of growth the terms of trade and relative employment in the world economy in the second part the paper reviews the empirical literature on south north and south south trade and the theories of north south technological gaps intra industry trade and external economies finally we analyze the literature on exports and economic growth and the neo classical keynesian and disequilibrium approaches to the theory of import controls

the equilibrium price range of oil economics politics and uncertainty in the formation of oil prices abstract this paper attempts to clarify the articulation between economic and political factors in the formation of petroleum prices it begins with defining the political factors then it gives a definition of the dynamic equilibrium price of a mineral commodity market the essential point is that when actors control significant low cost reserves and will not or cannot adopt behaviour of a substantial economic rationality then the economic analysis does not allow a unique dynamic equilibrium price to be determined however it does permit definition of an equilibrium price range within which political preferences may be expressed finally the paper draws some conclusions on what could be discussed within the scope of a new oil producer consumer dialogue

industry and underdevelopment re examined recent work by lipton stewart warren and others has from differing standpoints called into question much of the conventional wisdom of the dependency school shared by my book industry and underdevelopment about the relationship between development and industrialisation four of these arguments that industrialisation is necessary to meet human needs that underdeveloped countries are in general not succeeding in industrialising that capital intensive technology is desirable and that industrialisation requires more autarky are re examined they are all found to be in need of considerable modification but the general lines of the proferred alternatives to them are for the most part not accepted either part of the problem is diagnosed as insufficient concern for the human consequences of actually existing industrialisations and too nationalistic a conception of socialism

entry deterrence by non horizontal merger we study when and how pure non horizontal mergers whether cross product or vertical can deter new entry organizational mergers implicitly commit firms to more aggressive price competition because heightened competition deters entry mergers can occur in equilibrium even when absent entry considerations they do not we show that in order to prevent a flood of entrants mergers arise even when a marginal merger costs incumbent firms more than does a marginal entrant

why are losses from trade unlikely examining a standard monopolistic competition model with unspecified utility cost functions we find necessary and sufficient conditions on their elasticities for welfare losses to arise from trade or market expansion two numerical examples explain the losses under unrealistic elasticities

unifying ricardo s theories of growth and comparative advantage the paper formally integrates ricardo s two sector growth model with his theory of comparative advantage differences with conventional representations of ricardian trade theory as well as with heckscher ohlin samuelson theory are noted it is shown that the ricardian equilibrium terms of trade are fully determinate as against the standard millian view also trade may depending on direction of specialization inhibit rather than promote growth and lead to a net contraction of the world economy copyright 1986 by the review of economic studies limited

capital rationing and organizational slack in capital budgeting this paper reconciles three stylized facts about capital budgeting in firms and shows that they are tied to the presence of asymmetric information among the several members of the firm each with his or her own objectives and decisions the facts of interest are 1 the existence of organizational slack 2 the rationing of resources within organizations 3 the stated cut off rate for accepting capital projects in firms is often greater than the market rate of interest organizational slack is defined as the excess of resources allocated over the minimum necessary to accomplish the tasks assigned resource rationing is defined as the under allocation of resources i e an increase in the amount allocated would generate revenues in excess of its costs rationing and slack are both manifestations of ex post inefficiencies an lp model is used to show that these inefficiencies can occur in ex ante efficient organizational designs when asymmetric information is present the optimal allocation policy involves a hurdle rate criterion in which the hurdle rate is strictly in excess of the cost of capital thus inducing rationing in some states of the world typically resources are optimally allocated such that slack exists in other states the optimal allocation policy trades off these two inefficiencies