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

can poorly informed regulators hinder competition this paper considers an entry deterrence game in which environmental policy is set without perfectly observing the incumbent firm s costs we investigate if regulators who can have an informational advantage relative to the potential entrant support entry deterring practices the paper demonstrates that while entry deterring equilibria only emerge under restrictive conditions when the regulator is perfectly informed these equilibria arise under larger settings as he becomes uninformed furthermore we show that the regulator is willing to support the incumbent s entry deterring practices regardless of his degree of information if entry costs are sufficiently high however when entry costs are lower the regulator only sustains this type of practices if he is poorly informed

the infant export industry argument when actual consumption experiences are required to learn about a commodity s qualities subsidization of infant exporters can be justified as a first best policy measure this paper develops a dynamic model of optimal foreign market cultivation and examines the type and magnitude of trade intervention that is warranted and how this intervention adjusts over time it also focuses on changing production consumption and trade patterns as well as on welfare implications for individuals and society as the subsidization process unfolds international borrowing is allowed and is shown to cushion against severe welfare losses in the early phases of export subsidization l argument en faveur de la protection d une industrie d exportation dans la phase initiale de son developpement quand on ne peut apprecier les qualites d un bien qu en le consommant effectivement on peut defendre comme politique optimale les subventions aux exportateurs dans la phase initiale de production de leur bien ce memoire developpe un modele dynamique de mise en valeur optimale des marches etrangers et examine quel type d intervention est justifiee quelle intensite de support est necessaire et a quel moment cette aide doit etre modifiee a mesure que le temps passe l auteur examine aussi les implications pour la structure de la production de la consommation et du commerce de ce type d intervention ainsi que ses effets sur le niveau de bien etre des individus et de la collectivite l emprunt international permet d amortir le choc de pertes de bien etre importantes dans les phases initiales de la subvention des exportations

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

industrial organization and public policy competition policy has been dominated by politics industrial organization can expect to exert an influence only insofar as it commands superior knowledge that is true with respect to the long run since economies of scale are limited to the short run competition is feasible in the long run therefore a trade off approach seeking to identify optimal market structures is misleading competition policy should instead be directed at prohibiting protective strategies of incumbents to deter entry competition being a process of creative destruction political viability of a competitive order requires competition policy to be supplemented by a social welfare policy

cross sector export externalities in developing countries abstract feder s model journal of development economics 1982 12 59 73 has been used extensively to measure the externality and productivity enhancing effects of one sector on the whole economy we argue that the model is misspecified make three modifications estimate it for the export vs non export sectors and compare our results with feder s

food supply and inflation abstract the paper presents an analytic version of the latin american structuralist theory of inflation it emphasizes the difference between the productive sectors of the economy and draws attention to the fact that the inflationary process is closely linked to inconsistent claims for shares in income it describes a keynesian economy with two three sectors real desired wages are rigid money is passive it is shown that the structuralist hypotheses are capable of generating disequilibria that can lead to constantly rising prices without any built in mechanism to offset them steady inflation can only persist if workers allow their real wage to be kept below target as the workers try to catch on the model will blow up an accelerating inflation can be observed in many latin american countries during periods when wage settlements aimed at restoring inflation losses escaped the government control the paper also explores the implications of foreign trade it shows that under structuralist hypotheses external disequilibria cannot be corrected through exchange rate devaluations alone and it examines the stagflationary impacts of an increase in the price of imported intermediates

terms of trade and domestic distribution export led growth with abundant labour abstract a general equilibrium macro model is constructed to explore effects of export led growth policies on the terms of trade and the domestic distribution of a developing region with abundant labour this region the south trades with another the north they have different technologies and supplies of factors it is shown that under certain conditions of dualism in the production of goods and of abundant labour supply in the south an increase in the volume of exports from the south may bring about a sustained worsening of the south s terms of trade with the north even if this increase in exports is due to a positive shift in demand from the north this change in the terms of trade is accompanied by a sustained loss of purchasing power of wages within the south these results take place in a walrasian stable market when technologies are more homogenous and labour less abundant the results are reversed increased exports will take place together with improvements in terms of trade and a tendency to equalise factor prices between the regions the results argue for coordination of domestic and international policies with special attention to technologies and labour markets

exports and growth critical minimum effort and diminishing returns abstract this paper provides some extensions and qualifications concerning the empirical evidence for the positive impact of exports on growth using a model of feder in particular the ideas of critical minimum effort and diminishing returns with respect to the export sector are given some empirical support

limit pricing when incumbents have conflicting interests abstract this paper considers entry into a market with two incumbents where one prefers entry and one dislikes it unlike the entrant incumbents know market demand in separating equilibria incumbents play full information nash equilibrium strategies when beliefs are unprejudiced separating equilibria only exist if entry is relatively unimportant for an incumbent in growing markets this condition will tend to be violated so that only pooling equilibria may exist

the choice between international labour and capital mobility in a dynamic model of north south trade abstract in a dynamic model of trade between two regions producing different products and having dissimilar labour market structures the impact of movements of capital and labour is examined it is shown that mobility of either factor of production benefits the full employment solow type economy in contrast an inflow of capital is detrimental to a labour surplus lewis type economy while labour outflow is beneficial

the direction of trade past and present and the learning effects of exports to different directions abstract this paper looks at the direction of trade in manufacturer the pattern predicted by the hos model hasn r materialized but some sense of the historical pattern is made by looking at the distribution of world income as well as exporting countries policies and product composition given the historical pattern and in particular the direction of japan s trade it is argued that developing countries today are under exporting to one another this is to their detriment insofar as trade among less developed countries teends to be comprised of manufactures that are skill and learning intensive the scope for an increase in such trade is assessed

entry deterrence and the free rider problem the public good aspect of entry prevention is examined in an industry characterized by an established oligopoly facing a potential entrant although incumbent firms act noncooperatively underinvestment in entry deterrence does not occur and in fact incumbents may find themselves in a pareto dominated arrangement in terms of profits by preventing entry

forgoing invention to deter entry abstract a monopoly facing potential entry may not want to develop an efficient technology even at zero r d costs such a phenomenon occurs if a new technology is distinct from the existing one so production uncertainty becomes technology specific then the monopoly can reduce the entrant s post entry profit to the point of deterrence by using the existing technology with which the entrant would enter we show that the monopoly develops a new technology when the entrant faces a sufficiently high or low entry cost but forgoes invention when the entry cost is intermediate these results hold both in quantity and price competition

north south trade and capital flows in a ricardian model of accumulation abstract a class based asymmetric general equilibrium model of the world economy is developed to trace the trajectory of the north south terms of trade the world profit rate the northern real wage and the level of southern employment in the presence of capital accumulation and technical progress it is shown that i accumulation must be accompanied by a continuing deterioration in the terms of trade of the south and may entail a cumulative contraction in its level of employment and ii technical progress in the south will of necessity produce a long run worsening of its terms of trade and assuming world demand for southern goods is priceinelastic of its level of unemployment

can developing country exports keep growing in the 1980s this paper reports on the initial findings of the program of studies on the impact of developing country exports of manufactures on the market of the principal industrial countries a discussion of the liberal protectionist balance leads to the conclusion that while quantitative assessments have been made of the decrease of protection through tariff reductions in the 1970 s it has not been possible to measure the increases in protection resulting from various other measures it seems that the resurgence of non tariff protectionism in the 1970s has not destroyed the liberal gains of earlier decades analysis of market penetration suggests the industrial countries market for ldc manufactures is large and still growing it appears that the liberal protectionist balance in the 1980s will be critical particularly for lower income and less successful developing countries policies to make liberal attitudes to trade dominant are suggested

signalling and entry deterrence a multidimensional analysis i consider whether a privately informed incumbent can use limit pricing and upward distortions in advertising to deter profitable entry profitable entry is not deterred when the incumbent is privately informed only about its cost type profitable entry may be deterred however if the incumbent is privately informed about its cost type and its patience level an equilibrium foundation is thus provided for the traditional hypothesis that limit pricing and aggressive advertising by an incumbent may deter profitable entry at a methodological level the article contributes by characterizing the refined equilibria of a signalling model with multiple dimensions of private information and multiple signals

super cycles of commodity prices since the mid nineteenth century summary decomposition of real commodity prices suggests four super cycles during 1865 2010 ranging between 30 and 40 years with amplitudes 20 40 higher or lower than the long run trend non oil price super cycles follow world gdp indicating they are essentially demand determined causality runs in the opposite direction for oil prices the mean of each super cycle of non oil commodities is generally lower than for the previous cycle supporting the prebisch singer hypothesis tropical agriculture experienced the strongest and steepest long term downward trend through the twentieth century followed by non tropical agriculture and metals while real oil prices experienced a long term upward trend interrupted temporarily during the twentieth century

limit price entry prevention when complete information is lacking abstract this paper extends an earlier paper by the author in which there were two economic agents an established firm and a potential entrant operating under complete information each agent being assumed to know the profit functions of both firms the present paper extends some of the results of the earlier work to a model in which it is not known with certainty to either agent what the profit functions would be after the entrant would come into the market

north south trade and southern industrialization abstract this paper presents a simple model of international trade and growth between a mature industrial region the north and a semi industrial primary exporting region the south under capital autarky per capita southern industrial output is minimized if the north is at the golden rule point regardless of whether capital is internationally mobile northern transfers to the south will not necessarily raise southern industrial output unless they reach a critical level additional transfers may crowd northern private investment in the south out if this critical level is not attained the effects of changes in saving behavior and technical progress are also studied

trade as the engine of growth in developing countries revisited economic growth in developed countries since the mid 1970s the only way to keep the engine of ldc growth beating at a satisfactory rate so the argument goes is to turn to an alternative source of fuel this lewis argues lies in trade among the developing countries which he asserts can take up the slack left by mdcs more developed countries as mdcs slow down 1980 p 560 pessimism about demand for ldc exports in developed countries markets is a recurrent theme in the development literature also familiar is the approach taken by lewis to dismiss past successes of ldcs in world trade by declaring the alleged engine of past growth to be no longer operating satisfactorily the intellectual foundations of the import substitution strategy laid in the 1950s by prebisch myrdal and most importantly nurkse rested on similar grounds arguing that the demand for periphery countries exports in the 20th century is far weaker than it was in the 19th century trade was dismissed as an engine of growth a function nurkse alleged it had served in the 19th century the solution prescribed in the 1950s was to look inward in effect to scrap the trade engine altogether lewis remedy coming two decades later when most importsubstitution possibilities in many ldcs have been all but exhausted retains the trade engine but seeks an alternative source of fuel to drive it the classic critique by irving kravis 1970 of nurkse s thesis of trade as a faltering engine of growth showed that export expansion did not serve in the nineteenth century to differentiate successful from unsuccessful countries p 850 this followed from two findings first that successful 19th century countries showed few signs of export dominated growth second that unsuccessful periphery countries enjoyed export expansion in the second half of the 19th century of the same order of magnitude as the temperate regions of recent settlement this led kravis to conclude that a more warranted metaphor

demand signalling and screening in channels of distribution this paper examines two ways channel members at the manufacturing and retail ends deal with asymmetric information in the context of new product introduction a manufacturer who has private information that demand for a new product will be high can differentiate itself from a manufacturer less confident of demand by undertaking high levels of pre launch advertising and offering a high wholesale price a retailer for its part can screen potentially high demand from potentially low demand products by stipulating a take it or leave it slotting allowance the assumption being that the offer will be accepted only by manufacturers confident of sufficient demand to recover the high initial cost of slotting allowances it is shown that manufacturers prefer to signal demand through advance advertising and wholesale price retailers to screen demand through slotting allowances it is shown that unless advance advertising is sufficiently effective slotting allowances yield higher total channel profits and higher social welfare

growth and trade with asymmetric returns to scale a model for nicholas kaldor manufacturing activities are subject of increasing returns to scale both of a static and a dynamic kind and under these conditions the presumption derived from ricardo s doctrine of comparative costs the presumption that free trade secures the best allocation of resources to each and every participant and that there must be net gain from trade all round no longer holds for under these conditions it can be demonstrated that free trade may lead to stunted growth or even impoverishment of some regions or countries to the greater benefit of others

oligopolistic entry deterrence under incomplete information recent work has investigated the effects of asymmetric information between an incumbent firm and a potential entrant this study extends the analysis to allow the initial market structure to be a noncooperative oligopoly we show that there is a bayesian nash equilibrium in which the incumbent firms although unable to collude strategically deter entry that would have occurred under complete information in contrast to the past limit pricing literature it is a high price that deters entry as it signals to the potential entrant that this is a high cost industry extending the model to allow for multiple potential entrants we find that increasing the degree of potential competition raises the preentry price and reduces the likelihood of entry

exports growth and threshold effects in africa abstract the relationship between openness and growth remains a controversial issue in development economics with many studies focusing on the export growth relationship this paper examines whether the relationship between exports and growth found in large cross section studies also holds in the context of african economies the paper employs threshold regression techniques to examine whether african countries benefit more from exports when they reach a certain level of development or openness our results suggest that there is indeed a positive relationship between exports and growth in africa the threshold regression analysis also suggests that it is not necessary for a country to reach a certain level of development or to have an existing export base for this relationship to hold though it is found that the relationship is stronger for countries that experience higher rates of export growth

gstp tariff reduction and its effects on south south trade in manufactures using a gravity model with import tariffs on manufactures as an explanatory variable both at the import and at the export side the impact of tariffs on trade in manufactures is analyzed for a sample of 39 less developed country ldc importers the consequences of an agreement on a global system of trade preferences gstp for manufactures are estimated by lowering these tariffs for intra ldc trade by 20 and 50 alternatively the short term effects are found to be relatively modest and the long term effects considerably larger trade diversion from developed country dc to ldc suppliers has only limited impact

colombian international trade from a physical perspective towards an ecological prebisch thesis abstract prebisch s approach to economic development was based on the notion that there is an international historical division of labour peripheral countries are specialised in exporting primary goods while centre countries export industrial goods the terms of trade for peripheral countries tend to deteriorate this approach can be extended to ecological issues the international centre periphery division does not only involve the monetary exchange of goods and capital but also the physical exchange in which southern countries provide materials and energy so that northern countries can develop their socioeconomic metabolism this metabolic process is guaranteed through cheap prices for primary goods this paper aims to apply and extend prebisch s thought on unequal exchange both monetary and ecological in relation to colombian trade in the period 1970 2002 using material flow analysis

strategic entry deterrence in analyzing deterrence of large scale entry two classes of entry barriers may be distinguished an innocent entry barrier is unintentionally erected as a side effect of innocent profit maximization in contrast a strategic entry barrier is purposely erected to reduce the possibility of entry two types of innocent barriers may also be distinguished a postentry absolute advantage has the property that if entry did occur the established firm would be at a profit advantage over the entrant examples are superior technology or product design patents and lower input prices a preentry asymmetry advantage arises from the fundamental preentry asymmetry between established firm and potential entrant before the entrant makes his entry decision the established firm has already committed resources this prior existence gives first move advantages the preentry asymmetry is independent of symmetry or asymmetry in the rules the equilibrium concept of the postentry game that might ensue even if the postentry game will be played according to nash cournot or entrant as leader rules the preentry leadership

does anonymity matter in electronic limit order markets we develop a model in which limit order traders possess volatility information we show that in this case the size of the bid ask spread is informative about future volatility moreover if volatility information is in part private we establish that i the size of the bid ask spread and ii its informativeness about future volatility should change in the same direction when limit order traders identifiers stop being disclosed we test these predictions using data from the paris bourse as expected we find that the average quoted spread and its informativeness are significantly smaller when limit order traders identifiers are concealed these findings suggest that the limit order book is a channel for volatility information

sequential entry industry structure and welfare in this paper we reexamine the relationship between potential competition industry structure and welfare in a market subject to a sequential entry threat where firms can make quantity commitments and have access to a constant returns technology it is shown that provided entry is not blockaded the incumbent s will either prevent entry or allow all the potential entrants in furthermore actual entry may decrease but social welfare never goes down with more potential entrants nevertheless with a finite number of potential entrants policies which lower the cost of entry need not be beneficial in welfare terms

a dynamic duopoly model with asymmetric information this paper investigates the impact of asymmetric information on the set of equilibria of a two period duopoly game with price competition it turns out that all admissible sequential equilibria of this game share a collusive character i e ex ante expected profits for a firm of any type are higher than in the complete information case for small uncertainties the results are asymmetric a small probability of a good type firm does not make much difference on the set of equilibrium payoffs but a small probability of a bad type firm does these results survive the introduction of kohlberg and martens 1986 stability concept copyright 1990 by blackwell publishing ltd

the role of potential competition in industrial organization potential competition has been recognized as a mechanism to control the exploitation of market power at least since the work of j b clark 1902 but it was not until 50 years later that economists most notably joe bain and paolo sylos labini refocused attention on the idea with inputs from the theories of imperfect competition optimal control and dynamic games their work evolved into ever more sophisticated models of the reactions of existing competitors to the threat of new competition although the most appropriate models of competitive interaction are those which begin with a specific industry a number of theories have been proposed which attempt to develop more general conclusions my purpose in this paper is to develop an understanding of the strengths and limitations of these alternative theories by examining the available theoretical empirical and institutional knowledge rather than attempt the sisyphean task of recounting every model which relates conditions of entry and market performance i have partitioned the analysis into four major schools of thought according to their most central propositions these are the traditional model of limit pricing dynamic limit pricing the theory of contestable markets and the market efficiency model traditional limit pricing models rest on the assumption that firms respond to entry but are able to earn persistent profits when the structural characteristics of markets make entry difficult dynamic limit pricing is similar but emphasizes that markets can only be temporarily protected from entry contestability theory in its pure form asserts that potential competition is as effective as actual competition in controlling market performance the efficient markets hypothesis broadly interpreted states that markets are workably competitive and that the market structure reflects differential efficiency not strategic behavior while one can construct many other hypotheses about potential competition these classifications

information in cournot signaling with incomplete control abstract we embed signaling in the classical cournot model in which several firms sell a homogeneous good the quality is known to all the firms but only to some buyers the quantity setting firms can manipulate the price to signal quality because there is only one price in a market for a homogeneous good each firm incompletely controls the price signal through the quantity decision we characterize the unique signaling cournot equilibrium in which the price signals quality to the uninformed buyers we then compare the signaling cournot equilibrium with the full information cournot equilibrium signaling is shown to increase the equilibrium price moreover under certain conditions regarding the composition of buyers the number of firms and the distribution of costs across firms the effects of signaling and market externality cancel each other in other words the profits under signaling cournot equal the profits of a cartel in a full information environment

pricing strategy quality signaling and entry deterrence abstract i investigate a pricing strategy that is aimed at deterring entry by applying a two period model of a durable goods monopolist there exists an incumbent that is of two types that is high and low quality types they differ in terms of their r d capabilities and the incumbent s type is assumed to be unknown to an entrant if the entrant decided to enter the market nash bertrand price competition ensues between the incumbent and the entrant i show that not only limit pricing but also prestige pricing signals the incumbent s quality type which serves to discourage entry in the prestige pricing the high quality type sells the products at an intentionally higher price i also show that although limit pricing is more desirable than prestige pricing from a social welfare viewpoint the incumbent can still choose prestige pricing

the role of multiple potential entrants sequential entry in noncooperative entry deterrence a number of authors have recently considered whether the free rider problem is exhibited in models characterized by multiple potential entrants sequential entry bernheim 1984 and eaton and ware 1987 find that the free rider problem is not an important factor while mclean and riordan 1989 find that it is in this article i identify a general property whose presence is important for whether a model of noncooperative entry deterrence exhibits a free rider problem and in this way help clarify why the above mentioned authors reach these diverse conclusions the article also demonstrates that quite plausible changes in the specifications of both bernheim and eaton and ware lead to incumbent firms underinvesting in entry deterrence

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

strategic deterrence of sequential entry into an industry industrial entry deterrence is typically studied in a setting where an established firm or firms confront and attempt to deter a single potential competitor during the evolution of most industries however a sequence of firms enters or attempts to enter at distinct points in time consideration of issues arising from sequential entry fundamentally alters the qualitative nature of the deterrence decision undertaken by incumbent firms within a sequential setting counterintuitive behavior may be observed specifically numerous government policies designed to decrease industrial concentration penalties for anticompetitive practices subsidization of entry consent decrees restructuring industries may have the opposite effect

strategic entry deterrence recent developments in the economics of industry this paper reviews the recent developments in the economics of industry with respect to strategic entry deterrence starting from bain s 1956 classical analysis a simple two stage game between an incumbent firm and a potential entrant is used to present the general structure of the entry deterrence problem commitments credible threat and sub game perfection are illustrated in this context the various strategic variables that an incumbent firm can use to bar entry are discussed the issue of whether a group of incumbents can noncooperatively deter entry is taken up and some empirical evidence is reviewed copyright 1989 by blackwell publishers ltd

beyond import substitution and export promotion a new typology of trade strategies there is considerable confusion in the literature as to what exactly is meant by export promotion or outward orientation this article identifies five mutually exclusive trade strategies and defines the underlying sectoral and market orientations of each it then measures empirically the strategies of six developing countries the empirical findings indicate that some of the successful east asian countries actually pursued an infant industry based exporter oriented protected export promotion strategy not the commonly perceived static comparative advantage based export promotion strategy their protectionist policies are not mere exceptions but integral elements of their export oriented strategy

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

competition and confidentiality signaling quality in a duopoly when there is universal private information abstract we model non cooperative signaling by two firms that compete over a continuum of consumers assuming each consumer has private information about the intensity of her preferences for the firms respective products and each firm has private information about its own product s quality we characterize a symmetric separating equilibrium in which each firm s price reveals its respective product quality we show that the equilibrium prices the difference between those prices the associated outputs and profits are all increasing functions of the ex ante probability of high safety if horizontal product differentiation is sufficiently great then equilibrium prices and profits are higher under incomplete information about quality than if quality were commonly known thus while signaling imposes a distortionary loss on a monopolist using price to signal quality duopolists may benefit from the distortion as it can reduce competition finally average quality is lower since signaling quality redistributes demand towards low quality firms

signalling strength limit pricing and predatory pricing this article merges two areas of strategic pricing theory a dynamic signalling game with two sided uncertainty is presented in which an incumbent is confronted with potential entry and chooses between limit pricing and predatory pricing as a means of achieving or maintaining monopoly profit initial distributions across player types are pivotal to this decision results show that when the incumbent is likely to be strong relative to the entrant predatory pricing is chosen when the incumbent is likely to be weak relative to the entrant limit pricing is chosen for intermediate cases a strong incumbent may choose a combination of these two signalling strategies

antitrust and the new industrial economics my assignment here is to assess the implications of recent theoretical work in industrial economics for antitrust in the united states i don t have space enough to present a comprehensive survey of that work nor even to catalog all recent developments with apparent antitrust implications i attempt instead to describe the general character of those implications limiting myself to a few illustrative specifics industrial economics affects antitrust policy in three different ways first it is used in positive analysis aimed at determining whether or not current law has been violated in specific cases and at assessing damages due injured parties second it should be used in evaluating the desirability of relief that might be imposed in particular cases in order to alter structure or conduct if a violation is found finally the tools and results of industrial economics are important inputs in the formulation of general rules of law i argue here that the new industrial economics can contribute a lot to the positive analysis of individual cases but it has much less to say about the desirability of particular relief or of general rules of law a final section briefly examines some implications of this situation

value of reputation in the chain store game with multiple incumbents abstract we extend the basic chain store game to the two incumbent case a highly stylized model is developed to analyze incentives of incumbent firms to maintain reputation for toughness entry deterrence has a public good property since maintaining reputation is costly each incumbent has an incentive to free ride on the entry deterring activities of its counterpart as a result of these incentives both incumbents accommodate when they both have a relatively high initial reputation for toughness this extreme form of underinvestment in entry deterrence becomes less likely as the number of markets with potential entry increases we also demonstrate that an incumbent s payoff is a decreasing function of its reputation over a large range of parameters this result stands in sharp contrast to the existing versions of the chain store game where high reputation for toughness always benefits a weak incumbent

colluding on excluding abstract in an oligopoly characterized by barriers to re entry a finite horizon complete information convex costs and the presence of three identical firms i show that in subgame perfect equilibrium two of them the predators can choose to charge an initial price that is so low that the third the prey decides to exit immediately in this predatory pricing equilibrium the predators can enjoy higher profits than in the best collusive equilibrium with three firms thus a coalition of two firms can benefit from colluding on excluding

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

when additional resource stocks reduce welfare in the dominant firm model we show that an increase of the fringe s reserves of a nonrenewable resource may lead to a decrease in aggregate discounted social welfare this happens when the difference between the fringe s extraction cost and the dominant firm s is positive and large enough we also show that welfare might decrease if the fringe s marginal extraction cost decreases

inelastic demand for southern goods international demonstration effects and uneven development abstract this paper examines a model of trade between a rich north and a poor south to consider the implications of the income inelasticity of demand for southern goods and international demonstration effects for international economic development defining uneven development to mean a sustained increase in the ratio of northern to southern capital the possibility and the conditions for its occurrence for these reasons and its relation to the deterioration of the southern terms of trade are examined

oligopoly limit pricing in the lab we examine the behavior of senders and receivers in the context of oligopoly limit pricing experiments in which high prices chosen by two privately informed incumbents may signal to a potential entrant that the industry wide costs are high and that entry is unprofitable the results provide strong support for the theoretical prediction that the incumbents can credibly deter unprofitable entry without having to distort their prices away from their full information levels yet in a large number of cases asymmetric information induces incumbents to raise prices when costs are low the results also show that the entrants behavior is by and large bi polar entrants tend to enter when the incumbents prices are low but tend to stay out when the incumbents prices are high

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

the structural location of third world states within the international division of labor this study attempts to determine the factors that affect a third world country s role in the international division of labor as measured by the degree of processing of its exports in 1980 competing hypotheses arising from the classical and neoclassical economic neo marxist and modernization literatures are tested by using a cross sectional design in which the units of analysis are third world states for which comprehensive data could be collected the findings suggest that a number of states have ascended the hierarchy of the international division of labor through a process of indebted industrialization the present study provides empirical support for frieden s 1981 contention that international banking capital rather than direct transnational investment has been relied upon by proactive third world states in their effort to diversify their exports by developing more advanced production processes

technology creation in semi industrial economies abstract technological activities in the semi industrial economies of latin america leading to the adaptation of imported technologies as well as the development of new products and processes have been both an involuntary byproduct of manufacturing activities and the result of deliberate decisions to set up technological research facilities technological research reported by latin american firms is shown to be largely complementary to production and carried out to reap the extra benefits of protection external effects are thus disregarded since the benefits from industrial production suffice to induce the requisite adaptive research the paper suggests that the as yet not well understood interaction between industrial and technological development be studied by focusing on technology as information and engineers as its processors looking at the learning stages from using imports to the creation of new products and examining these processes in terms of a progression toward increasing technological complexity

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

recent trends in trade among developing countries this paper presents the early results of empirical work on trade among developing countries the main conclusion is that non fuel trade among developing countries excluding capital surplus oil exporters remained a remarkably stable share of their total trade between 1963 and 1977 this constancy does however conceal two opposing trends the share of manufactures exported to developing countries has been falling sharply while that of non fuel primary commodities has been rising the latter largely because of the demands of the newly industrializing countries four particular points emerge from the evidence i there is no obvious sign of a bias against trade among developing countries except whatever effect their own commercial policies may have ii the more inward looking countries tend to send a higher proportion of their exports to other developing countries and regional integration strengthens this effect iii exports of manufactures to developing countries are much more capital intensive than those to industrialized countries and iv exports to developing country markets may not be the vital first stage for capital goods exports that is sometimes supposed

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

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

potential competition actual competition and economic welfare though the origins of anti trust legislation at least in the united states undoubtedly lie in late nineteenth century populist sentiments its current intellectual foundations rest on modern welfare economics these intellectual foundations provide more than just rhetoric as courts have increasingly relied on the testimony of economists to interpret and reinterpret the inevitably vague language of the legislation the reliance on modern welfare economics is somewhat paradoxical for the assumptions underlying the fundamental theorem of welfare economics are peculiarly ill suited to deal with competition in the central area to which anti trust is applied the industrial sectors of modern economies these sectors are characterized by important non convexities which admittedly present inherent problems for competition the competition that does take place is as likely to take the form of product and r d competition rather than price competition product competition plays no role in the conventional welfare paradigm which assumes a complete set of commodities and it is not that arrow and debreu simply forgot to include technical change in their formulations the natural assumptions underlying the analysis of the production marketing and utilization of knowledge are basically inconsistent with those underlying the arrow debreu model invited paper european economic association meetings copenhagen august 1987 financtal support from the national science foundation and the hoover institution is gratefully acknowledged the presence of non convexittes in production is central in explaining why only a ftnite subset of the set of possible commodities is in fact produced techmcal change is characterized by non convexities in its production radner and stiglitz 1984 if technology exhibits say constant returns to scale at a fixed technology when inputs devoted to r d are included it exhibits non convexities the value or information may increuse with the scale of production while conventional theory focuses on markets for homogeneous commodities each piece of new knowledge must be dinerent from previously produced knowledge knowledge has many of the properties of public goods it being both dificult and undesirable to exclude markets for knowledge are at best imperfect and as we have argued

trade accumulation and uneven development abstract this paper develops a two country model of capital accumulation and growth where the industrial sector exhibits increasing returns to scale it shows that uneven development is a necessary outcome in such a model an initial discrepancy in capital labor ratios between the two countries will cumulate over time leading to the division of the world into a capital rich industrial region and capital poor agricultural region which region takes on which role depends on primative accumulation that is on which region starts with more capital if capital is mobile internationally the model can given rise to a two stage pattern of development a first stage where trade is the engine of growth in the leading country and a second in which foreign investment takes on that role which is reminiscent of the hobson lenin theory of imperialism

exports of technology from semi industrial economies and local technological development abstract this paper analyzes technology exports from five of the most industrially advanced developing countries argentina brazil india korea and mexico it explores the nature of the exports and of the exporting firms identifies the competitive advantage underlying different types of technology exports and analyzes the comparative advantages of the five countries in these exports based on an analysis of different strategies toward the trade in the elements of technology it summarizes tentative lessons about relationships between trade in the elements of technology country and firm strategy and local technological development