optimal lot sizing for an unreliable production system based on net present value approach abstract the paper considers the net present value npv approach to determine the economic manufacturing quantities for an unreliable production system over an infinite planning horizon the npv of the expected total cost is obtained under general failure time and general repair time distributions and its asymptotic characteristics are examined by perturbation of the instantaneous discount rate the criteria for the existence and uniqueness of the optimal production time lot size are derived under exponential failure and constant zero repair time the performance of the npv model is compared with the traditional long run average cost model in terms of the npv of the expected total cost based on the optimal decisions of the two models from numerical experiments it is observed that the decision based on the average cost can be 10 worse than the decision based on the npv depending upon the machine failure rate

the unbalanced uruguay round outcome the new areas in future wto negotiations the uruguay round involved a grand north south bargain the north reduced import barriers particularly in textiles and agriculture the south adopted new domestic regulations in such areas as services and intellectual property changes that would lead to increased purchases from the north in mercantilist economics apples for apples imports for imports in real economics apples for oranges the authors argue that while the north s reduction of import barriers benefits both the north and the south the new domestic regulations adopted by countries of the south could prove costly to those countries to begin with the regulations will be expensive to implement and while the cost side of their impact is secured by a legal obligation in the case of intellectual property rights for example the cost is higher prices for patented goods the benefits side is not so secured

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

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

the international negotiation game some evidence from the tokyo round this paper examines the tokyo round negotiation 1973 1979 under various cooperative game solution concepts out of the many tariff cutting proposals in the tokyo round the swiss proposal was finally agreed upon by all major players the choice of the swiss proposal suggested that egalitarian considerations are important for this type of cooperative game since the kalai smorodinsky solution the shapley value modified and the nucleolus solution have this egalitarian property they all predict the outcome of the negotiation very well this paper investigates the types of cooperative game solution concepts that best describe the tariff reduction negotiations in the tokyo round 1973 1979 since the objective is to infer the type of game that can closely model the actual negotiation the best game concept for our purposes is the one which predicts the actual outcome the swiss tariff cutting formula most successfully under periodic resurgence of protectionist ideology as occurred during the tokyo round negotiations there are various cooperative solution concepts some emphasize the egalitarian nature of the outcome some the efficiency nature of the outcome and some emphasize both aspects see section ii the present paper concludes that when the change in a country s trade balance becomes an important consideration for negotiators the egalitarian aspect emerges as the most important cooperative game solution concepts an interesting finding of the present paper is the bargaining powers of the four major players united states eec japan and canada were roughly equal as shall be explained this is because each of these players was equally destructive to the tokyo round negotiation there are currently four simulation studies on the impacts of the tokyo round deardorff and stern 1983 baldwin et al 1980 brown and whalley 1980 and cline et al 1978 the present paper uses the simulation studies by cline et al for our analysis for three reasons 1 the brookings study is based on keynesian short run impacts of the tokyo round which seems to fit the objectives of negotiators 2 it represents the most complete welfare analysis of various proposals and 3 it was the most influential study done around that time perhaps it can reflect the conventional wisdom of negotiators in that period the present paper is organized as follows section i discusses the basic assumptions section ii examines various game solution schemes or concepts section iii presents the case of the five major proposals section iv extends the result of section iii to twelve proposals section v discusses the robustness of various assumptions followed by a conclusion in section vi

supply chain coordination contracts with inventory level and retail price dependent demand abstract in this paper three unlike coordinating contracts namely i joint rebate contract ii wholesale price discount contract and iii cost sharing contract are proposed for two echelon supply chain coordination perspective under stock and price induced demand it is found analytically that the manufacturer s and the retailer s preferences among three contractual forms are not always aligned by applying bargaining theory it is established that stock elasticity plays an important role to select coordination contract and a threshold value stock elasticity is also determined below which cost sharing contract is not feasible it is also found that the retailer with higher bargaining power always prefers wholesale price discount contract among considered three contracts results are illustrated analytically as well as numerically

a generalized quantity discount pricing model to increase supplier s profits in this paper the joint problem of ordering and offering price discount by a supplier to his sole major buyer is analyzed the objective is to induce the buyer to alter his order schedule and size so that the supplier can benefit from lower set up ordering and inventory holding costs we generalize the quantity discount pricing model of monahan monahan j p 1984 a quantity discount pricing model to increase vendor profits management sci 30 6 720 726 to 1 explicitly incorporate constraints imposed on the amount of discount that can be offered and 2 relax the implicit assumption of a lot for lot or order for order policy adopted by the supplier an algorithm is developed to solve the supplier s joint ordering and price discount problem

farm real estate pricing under risk an empirical investigation the rapid increase in farm real estate prices during the last three decades has heightened interest among agricultural economists in explaining this phenomenon even prior to the 1950s several researchers expressed concern that farm real estate prices were increasing at a faster rate than could be justified by farm income 29 technological change and government programs were evaluated for structural changes in price determination 6 13 other important explanatory variables were farm enlargement and urbanization influences 34 more recently harris and nehring 11 lee and rask 18 harris 10 and boehlje and griffin 3 explored the effects of such factors as farm size inflation and government price supports on farm real estate prices while previous research contributed to understanding farm real estate price determination several important questions remain unanswered how is the farm real estate market linked to other capital markets heady and tweeten 12 and later reynolds and timmons 30 used rate of return on common stock as an explanatory variable in their farm real estate price models however their approaches are based more on intuitive reasoning than on rigorous theoretical development how does risk affect farm real estate prices the fact that real estate is a risky investment generally was ignored in previous research 2 441 4 recently harris 10 and boehlje and griffin 3 included risk information in their analyses of factors affecting bid prices for land these studies use strong microfoundations that are not intended to directly reflect risk related linkages with other markets or sectors these issues can be addressed conceptually through capital market theory the purpose of this paper is to explore farm real estate price determination in the context of capital market theory to determine the relationship between the farm real estate

the estimation of demand parameters in hedonic price models this paper shows that the econometric problem of estimating hedonic demand parameters is not a standard identification problem caused by demand supply interaction as has been often assumed estimation procedures based on this assumption lead to biased results the hedonic estimation problem is instead caused by the endogeneity of both prices and quantities when households face a nonlinear budget constraint an instrumental variables solution to this problem is suggested using instruments that exogenously shift the budget constraint

some economics of global warming the greenhouse effect itself is simple enough to understand and is not in any real dispute what is in dispute is its magnitude over the coming century its translation into changes in climates around the globe and the impacts of those climate changes on human welfare and the natural environment these are beyond the professional understanding of any single person the sciences involved are too numerous and diverse demography economics biology and the technology sciences are needed to project emissions atmospheric chemistry oceanography biology and meteorology are needed to translate emissions into climates biology agronomy health sciences economics sociology and glaciology are needed to identify and assess impacts on human societies and natural ecosystems and those are not all there are expert judgments on large pieces of the subject but no single person clothed in this panoply of disciplines has shown up or is likely to this article makes an attempt to forecast the economic and social consequences of global warming due to anthropogenic greenhouse gases and attempting to prevent it

a household hedonic model of rice traits economic values from farmers in west africa abstract new crop varieties often have been promoted in developing countries based upon superior yield vis a vis locally available varieties this research presents a hedonic price model for upland rice by drawing upon the input characteristics and consumer good characteristics model literature model specification tests determine that a combination of production and consumption characteristics best explains the willingness to pay for new upland rice varieties the household model specification determined that five traits explain the willingness to pay for new rice varieties plant cycle length plant height grain colour elongation swelling and tenderness yield was not a significant explanatory variable of the willingness to pay for seed the implications of this model are two fold first varietal development and promotion must include post harvest characteristics in addition to production traits when determining which varieties to promote for official release secondly non yield production characteristics such as plant height and cycle length are significant factors in producer s assessments of the value of a new variety overall this paper provides an alternative explanation for limited adoption of modern upland rice varieties in west africa varietal evaluation programs have focused too narrowly on yield evaluation and have not promoted varieties with superior non yield characteristics than locally available varieties

a hedonic price model for rough rice bid acceptance markets several quality factors are important in valuing rough rice this paper first evaluates the ability of federal grades to explain these factors second the discounts associated with various quality factors are estimated finally the factors affecting acceptance of a bid are investigated the results indicate grades are useful but inadequate in explaining observed quality differentials the major quality factor in determining price was head yield stinkbug damage was the most important quality factor of those that producers could control the probability of acceptance increased with higher than expected bids smaller lot sizes more bidders and as the marketing season progressed

an eoq model with random variations in demand this paper presents a model that incorporates variations in the demand rate at random time points into the inventory planning decision these changes in demand may occur due to economic recessions labor strife starting or ending or other events that result in a period of time during which the rate of demand is shifted up or down from its current level the paper uses system point level crossing theory to derive expressions for the distribution and expected value of on hand inventory ordering rate and the expected total cost rate for a given ordering policy a sensitivity analysis is conducted and a number of qualitative properties are provided to illustrate the use of the results to obtain optimal order quantities

disguised protectionism and linkages to the gatt wto member states of the gatt wto have linked some issue areas outside trade to the institution and did so with varying depths at the same time they have chosen not to link other issue areas what accounts for this variation the author argues that states establish a legalized linkage between the gatt wto and an issue area outside it when they are uncertain about the possibilities of disguised protectionism such uncertainty exists under two conditions when diversity in regulations in an issue area across states generates a large adverse impact on trade negative externalities but that diversity can be justified at the international level for 1 having an independent objective apart from hampering trade and 2 when there are few alternative policies to achieve that objective legitimacy states establish a highly legalized linkage in these situations to reduce the uncertainty and minimize disguised protectionism by contrast when regulatory diversity exhibits low legitimacy states establish only a weakly legalized linkage in the absence of meaningful externalities they do not establish any linkages the author evaluates this argument in two ways he provides an overview of eleven issue areas about which there have been some debates or conflicts about linkages to the gatt wto in addition he carries out in depth case studies of three issue areas labor standards environmental standards and health safety standards the findings of this article contribute to a better understanding of international institutions and cooperation as well as of the evolution of the multilateral trade institution

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

valuing varieties with imperfect output quality measurement markets for agricultural products may be inefficient when signals do not adequately reflect product characteristics important to market participants preferences can be explicitly reflected in price premiums for measurable characteristics using hedonic methods however when product quality information is costly to obtain the problem is compounded bundling of quality traits by variety can serve to signal product quality a procedure is developed to derive the value of different varieties in meeting buyer demands an application to the hard red spring market wheat illustrates the use of a procedure to distinguish among varieties and provides empirical support for the existence of akerlof s lemon market in the release of wheat varieties

competition policy and intellectual property rights in developing countries c ompetition policy is a broad term covering all aspects of government actions that affect the conditions under which firms compete in a particular market the term competition law refers to legislation judicial decisions and regulations specifically aimed at avoiding the concentration and abuse of market power however many regulations stipulate exemptions from competition disciplines for purposes of achieving various social goals competition policy is therefore complex in its intentions and effects competition law has emerged as an issue for the wto largely because exporting firms in the high income developed economies argue that anticompetitive practices of competitors in foreign markets hinder their ability to penetrate those markets such practices may be largely private in nature and could be facilitated by the absence or weak enforcement of local competition laws these issues have prompted a number of proposals for negotiating a limited agreement on multilateral principles and disciplines in competition law within the world trade organisation wto however the debate is contentious and no consensus has emerged on whether and how to address competition law and regulations within the wto we argue in this paper that developing countries would gain if a wto agreement were reached that recognised the principle that competition law should promote open competition emphasised international cooperation in competition

a quantity discount approach to supply chain coordination abstract quantity discounts provide a practical foundation for inventory coordination in supply chains however typical supply chain participants may encounter difficulties in implementing the coordination policy simply because 1 specified lot size adjustments may deviate from the economic lot sizes and 2 the buying firm may face amplified overstocking risks related to increased order quantities the main objective of this study is to develop a quantity discount model that resolves the practical challenges associated with implementing quantity discount policies for supply chain coordination between a supplier and a buyer the proposed buyer s risk adjustment b ra model allows the supplier to offer discounts that capitalize on the original economic lot sizes and share the buyer s risk of temporary overstocking under uncertain demand the analytical results suggest that the proposed b ra discount approach is a feasible alternative for supply chain coordination under uncertain demand conditions

the effect of production versus consumption based emission tax under demand uncertainty abstract emission tax is an instrument widely adopted by countries and regions to incentivize emission abatement by emission intensive firms including manufacturers however policies differ in how they allocate emission responsibilities among stakeholders for example the chile emission tax directly penalizes manufacturers for the emissions they generate during their production production based emission tax whereas the sweden electricity emission tax penalizes the consumption of electricity rather than its production consumption based emission tax these two methods have potentially varying implications on manufacturers profits their emission abatement decisions as well as the resulting emission levels especially when demand uncertainty is involved in this paper we investigate the impact of the two distinct methods by studying a profit maximizing manufacturer facing stochastic demand under either production or consumption based emission tax the manufacturer s optimal decisions on its selling price production quantity and emission abatement investment are derived perhaps surprisingly we show that under either tax it is possible for an increase in the emission tax to discourage the manufacturer from investing in emission abatement the impact of tax rate abatement technology efficiency and demand uncertainty on the manufacturer s profitability and abatement decision are also studied interestingly higher demand uncertainty may motivate the manufacturer to invest more in emission abatement under production based emission tax using a numerical example of an electricity power generator we offer further insights into the comparison between the two taxes and find that there exist cases for either tax to dominate the other in terms of both profit and emissions

the transition of punjab agriculture a choice of technique approach the introduction of modern crop varieties in punjab india led to rapid income growth adoption rate and level of the new varieties is examined using a choice of technique approach in which techniques of production are identified by crop variety season of growth and method of production modeling the dynamic effects of technology resource availability and incentives reveals a consistent picture of the transition process the results show the importance of incentives and availability of quasi fixed inputs such as irrigation fertilizers and roads by the late 1970s the long run aggregate supply elasticity was between 1 3 1 5

land allocation in hyv adoption models an investigation of alternative explanations microeconomic theory provides four competing explanations for partial land allocation to new and traditional seed varieties in hyv adoption decisions input fixity portfolio selection safety first behavior and learning testing a general model that contains each as a special case suggests that they are jointly most likely to explain land allocation in the hyv adoption decisions of malawian smallholders yet when each explanation is tested to the exclusion of the others as is usually the case in the literature competing hypotheses are individually significant results suggest that employing approaches based on single explanations may lead to inappropriately narrow conclusions

compensating for information externalities in technology diffusion models the role of information in the adoption of new technologies is discussed focusing on the role of information externalities when nonadopters observe adopters in order to gather information a bayesian model of aggregate adoption is derived and the social planner s relationship to the model is discussed the fact that the information externality is uncompensated suggests that too little adoption may occur the social planner s problem is solved numerically demonstrating rapid learning on the part of adopters and a limited ability for the social planner to compensate for the information externality

subsidy scheme or price discount scheme mass adoption of electric vehicles under different market structures abstract this paper analyzes the electric and gasoline vehicle market under two different structures monopoly and duopoly taking social welfare into account the government offers a subsidy incentive scheme or a price discount incentive scheme to buyers of electric vehicles evs to promote the adoption of evs we formulate a utility model composed of a population of consumers who make utility maximizing choices and manufacturers who set an optimal pricing that responds to the interventions of the government using this model a framework for policy makers to find optimal subsidies or optimal price discount rates is developed unlike the monotonic relation in the monopoly setting in the duopoly setting the relationship between consumers low carbon awareness and evs demand depends on the government s policy although the demand for evs the consumer surplus the environmental impact and the social welfare are identical under two incentive schemes the government prefers to implement a subsidy incentive scheme due to the lower expenditure involved furthermore under a subsidy incentive scheme evs market in the monopoly setting has a smaller environmental impact than that in the duopoly setting from the numerical tests we show that results of social welfare comparison under two market structures depends on unit environmental impact of ev

coordination and profit sharing between a manufacturer and a buyer with target profit under credit option several studies have focused on buyer vendor coordination through quantity discount credit option mechanism but few quantitative models and investigations are available that have explored the mechanism for transfer of surplus generated due to coordination in this paper we develop a coordination mechanism through credit option such that both the parties can divide the surplus equitably after satisfying their own profit targets two situations are explored here in the first situation both the parties have no individual profit target from the business whereas in the second situation there are individual profit target for both the parties the proposed mechanism for division of surplus is studied through a numerical study and the impact of different parameter values on the results are examined

impact of electricity pricing policies on renewable energy investments and carbon emissions we investigate the impact of pricing policies i e flat pricing versus peak pricing on the investment levels of a utility firm in two competing energy sources renewable and conventional with a focus on the renewable investment level we consider generation patterns and intermittency of solar and wind energy in relation to the electricity demand throughout a day industry experts generally promote peak pricing policy as it smoothens the demand and reduces inefficiencies in the supply system we find that the same pricing policy may lead to distinct outcomes for different renewable energy sources due to their generation patterns specifically flat pricing leads to a higher investment level for solar energy and it can lead to still more investments in wind energy if a considerable amount of wind energy is generated throughout the day we validate these results by using electricity generation and demand data of the state of texas we also show that flat pricing can lead to substantially lower carbon e

the trade distorting effect of state trading enterprises in importing countries abstract this paper focuses on the potential trade distorting effect of state trading enterprises an issue that is likely to receive greater attention than hitherto in the context of the current agricultural negotiations in the wto although state trading enterprises can arise in both exporting and importing countries the emphasis here is on the importing country case our results show that state trading enterprises do distort trade though the nature of the distortion i e whether it is equivalent to an import tariff or import subsidy depends on the nature of exclusive rights bestowed by government on the state enterprise we also consider state trading enterprises in both developed and developing economies the main difference being the nature of the government s pay off function the theoretical framework allows us to derive the tariff equivalent effects for various types of stes the results suggesting that the trade distorting effect is likely to vary considerably dependent on the type of ste that arises in particular circumstances

new issues in the uruguay round and beyond the general agreement on tariffs and trade gatt is a treaty establishing a framework of rules and principles for policies affecting merchandise trade it also provides a forum in which sovereign states periodically engage in reciprocal trade liberalisation and rule making 2 as a result of substantial reductions in tariffs through periodic rounds of multilateral negotiations rule making has gradually become as if not more important than liberalisation per se starting with the kennedy round i964 7 but especially in the tokyo i973 9 and uruguay i986 rounds an increasing number of agenda items involved the negotiation of rules and disciplines for specific trade related domestic policies rather than further reductions in tariffs and other border measures rules pertaining to product standards subsidies and government procurement were prominent items on the agenda of the tokyo round the uruguay round further expanded the multilateral negotiating agenda by adding trade related investment measures trims trade related intellectual property rights trips and measures affecting the contestability of service markets the trend for multilateral trade negotiations to address domestic policies shows no sign of abating calls for a post uruguay round negotiation have identified issues such as competition policy foreign direct investment fdi regulations innovation policies and the interaction between trade and environmental policies as possible topics for discussion 3 in part the steady agenda expansion reflects changes in the structure of the global economy the managerial and technological innovations of the last decade such as just in time inventory management and the increased tradeability of services created pressures for greater specialisation and geographical splintering of production this in turn made regulations pertaining to services fdi transfer of technology and protection of intangible assets more important for both governments and firms flows associated with services fdi and intellectual property ip are smaller than merchandise trade but are quite substantial table i reveals that global merchandise trade in i990 was 3 5 trillion while world trade in commercial services was about 820 billion global receipts for ip were some 33 billion and income flows

a two stage supply chain coordination mechanism considering price sensitive demand and quantity discounts abstract this paper explores the coordination between a supplier and a buyer within a decentralized supply chain through the use of quantity discounts in a game theoretic model within this model the players face inventory and pricing decisions we propose both cooperative and non cooperative approaches considering that the product traded experiences a price sensitive demand in the first case we study the dynamics of the game from the supplier s side as the leader in the negotiation obtaining a stackelberg equilibrium and then show how the payoff of this player could still improve from this point in the second case a cooperative model is formulated where decisions are taken simultaneously emulating a centralized firm showing the benefits of the cooperation between the players we further formulate a pricing game where the buyer is allowed to set different prices to the final customer as a reaction to the supplier s discount decisions for the latter we investigate the difference between feasibility of implementing a retail discount given a current coordination mechanism and without it finally the implications of transportation costs are analyzed in the quantity discount schedule our findings are illustrated with a numerical example showing the difference in the players payoff in each case and the optimal strategies comparing in each case our results with existing work

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

in the shadow of law or power consensus based bargaining and outcomes in the gatt wto this article explains how consensus decision making has operated in practice in the general agreement on tariffs and trade world trade organization gatt wto when gatt wto bargaining is law based consensus outcomes are pareto improving and roughly symmetrical when bargaining is power based states bring to bear instruments of power that are extrinsic to rules invisibly weighting the process and generating consensus outcomes that are asymmetrical and may not be pareto improving empirical analysis shows that although trade rounds have been launched through law based bargaining hard law is generated when a round is closed and rounds have been closed through power based bargaining agenda setting has taken place in the shadow of that power and has been dominated by the european community and the united states the decision making rules have been maintained because they help generate information used by powerful states in the agenda setting process consensus decision making at the gatt wto is organized hypocrisy allowing adherence to the instrumental reality of asymmetrical power and the sovereign equality principle upon which consensus decision making is purportedly based

the discounted r q inventory model the shrewd accountant s heuristic abstract the discounted continuous review r q inventory model with continuous and stochastic demand is investigated new optimality conditions are derived clarifying the difference to the average cost case also graphically supported by depreciation theory applied to the value of a setup the results suggest an insightful and very precise approximation the shrewd accountant s heuristic based on a new average cost model it deepens and extends the work of hadley 1964 three examples are worked out in detail and the model is generalized to poisson demand and to stochastic lead times

tariff retaliation from a strategic viewpoint one of the most perplexing questions in international trade concerns the rationale for the existence of widespread barriers to trade in the current world economy 1 the numerous explanations that have been offered for the existence of tariffs are generally based on one of the following four arguments a the existence of market imperfections monopolies externalities etc invalidates the free trade theorem and thus free trade is not desirable or perhaps not obtainable b sluggish adjustment of the world economy to free trade implies that the existing tariffs are a temporary phase c non economic phenomena such as nationalism induce political or institutional tariff arrangements or d protectionist motives to improve the welfare of a country or a group of individuals in that country induce all countries to simultaneously impose tariffs while all of these factors can be important in the explanation of the existence of tariffs the purpose of this paper is to develop an extended analysis of the protectionist view the protectionist view is based on the optimal tariff theorem which states under very restrictive assumptions that a country can improve its welfare by imposing a tariff 5 12 a serious difficulty with this explanation is that the optimal tariff theorem assumes that no retaliation occurs as scitovsky 12 points out a country that could benefit from charging a tariff has monopoly power in trade surely a country sophisticated enough to exercise monopoly power in trade would expect its rivals to respond when tariffs are erected hence scitovsky argues that if protection is the monopolistic behavior of a collectivity two countries raising tariffs against each other are bilateral monopolists and we know that bilateral monopoly results in the two parties coming to some working agreement whose terms depend on their bargaining skill and are analytically indeterminate scitovsky concluded that a tariff war would result in an indeterminate solution with both countries worse off johnson 6 formalized scitovsky s agrument by allowing each country to adopt a cournot type assumption regarding its rival s reaction to a change in its own tariff thus

determining the need for issue linkages in multilateral trade negotiations in multilateral trade negotiations trade offs usually are made within the issue areas that are on the agenda in the absence of cross issue trade offs linkages agreement may not be possible to maximize both the potential gains from trade and the scope for agreement negotiators need to be willing and able to consider the feasibility of issue linkages this raises the practical problem of determining when such trade offs are likely to be necessary although quantitative methods of policy analysis have been developed they have not been widely used by policymakers in part owing to the fact that negotiations focus largely on nontariff measures this article proposes a qualitative approach to the problem and applies it to the tokyo and uruguay round negotiations on safeguards to protect domestic industries from problems related to increases in imports

a review of the stern review on the economics of climate change the stern review calls for immediate decisive action to stabilize greenhouse gases because the benefits of strong early action on climate change outweighs the costs the economic analysis supporting this conclusion consists mostly of two basic strands the first strand is a formal aggregative model that relies for its conclusions primari ly upon imposing a very low discount rate concerning this discount rate aspect i am skeptical of the review s formal analysis but this essay points out that we are actual ly a lot less sure about what interest rate should be used for discounting climate change than is commonly acknowledged the review s second basic strand is a more intuitive argument that it might be very important to avoid possibly large uncertain ties that are difficult to quantify concerning this uncertainty aspect i argue that it might be recast into sound analytical reasoning that might justify some of the review s conclusions the basic issue here is that spending money to slow global warming should perhaps not be conceptualized primarily as being about consump tion smoothing as much as being about how much insurance to buy to offset the small change of a ruinous catastrophe that is difficult to compensate by ordinary savings

fuel economy car class mix and safety fuel economy standards change the composition of the vehicle fleet potentially influencing accident fatality risks i estimate the direction and magnitude of this impact introducing a correction for selection on driver behavior a policy application using my new estimates shows that the present distinction between light trucks and cars in fuel economy rules has very negative consequences for overall safety each mpg increment to the standard results in an additional 150 fatalities per year in expectation my correction for selection is pivotal in this finding i then demonstrate a simple alternative regulation that can produce near zero changes in accident fatalities

price risk in supply equations an application of garch time series models to the u s broiler market that risk considerations figure prominently into agents decisions is now widely recognized by both theoretical and applied economists for example much research has focused on extending neoclassical production theory to include agents that maximize expected utility of returns under price and or output uncertainty 37 4 25 35 12 31 concurrent with this theoretical research on risk has been a growing literature on the empirical effects of risk on economic decisions examples include the studies on the role of risk in aggregate agricultural production and

does issue linkage work evidence from european alliance negotiations 1860 to 1945 though scholars widely claim that issue linkage the simultaneous negotiation of multiple issues for joint settlement can help states conclude international agreements there exist some notable skeptics resolving this debate requires empirical evidence however beyond a few case studies there exists no direct and systematic evidence that issue linkages actually increase the probability of agreement i address this lack of direct and systematic evidence by combing original data on failed alliance negotiations with data from the alliance treaty obligations and provisions atop database using matching techniques i find that for alliance negotiations between 1860 to 1945 offers of trade linkage did substantially increase the probability of agreement besides confirming issue linkage s ability to help clinch an agreement this article s research design and evidence have far reaching implications for the study of negotiations and alliances the research design illustrates the value of considering the dogs that didn t bark as it identifies both successful and failed negotiations the article s evidence explains the high rate of alliance compliance identified by previous scholars and highlights a need to rethink the alliance formation process

industrial pricing theory and managerial practice we organize the existing theoretical pricing research into a new two level framework for industrial goods pricing the first level consists of four pricing situations new product competitive product line and cost based the second level consists of the pricing strategies appropriate for a given situation for example within the new product pricing situation there are three alternative pricing strategies skim penetration and experience curve pricing there are a total of ten pricing strategies included in the framework we then identified a set of cost product market and information conditions which determine what pricing situation s a firm is facing as well as which strategies are appropriate within a given situation some of these determinant conditions are common to many pricing strategies e g highly elastic demand while others are unique to a given strategy within a particular pricing situation for example within the product line situation the profitability of supplementary sales is a unique determinant of the complementary product pricing strategy razor and blade pricing using this framework as a basis for an empirical study we examined how well current industrial pricing practice matches the prescriptions from the existing research our sample consisted of 270 respondents 27 response rate of these more than 50 indicated that they used more than one pricing strategy in formulating their most recent pricing decision for a high value industrial product sold in the united states as in previous research cost plus pricing was the most often cited pricing strategy 56 of the respondents since the respondents were able to indicate their use of more than one pricing strategy the data are of the pick k from n variety in order to model the managers pricing strategy choices we constructed a stacked binary logit with a separate observation for each strategy within a given pricing situation the signs of the determinant variables were estimated as interaction terms the new product pricing strategies skim penetration experience curve were used for new models in the market skim pricing was used in markets with high levels of product differentiation by firms at a cost disadvantage due to scale penetration pricing was used by firms with a cost advantage due to scale in markets with high level of overall elasticity but low brand elasticity experience curve pricing was used for minor innovations by firms with low capacity utilization in markets with a high level of differentiation the competitive pricing strategies leader parity and low price supplier were used in mature markets parity pricing was used by firms in a poor competitive situation i e high costs low market share low product differentiation these firms were also unable to take advantage of high levels of elasticity since their capacity utilization was high in contrast the low price supplier strategy was used by firmswith low costs due to scale advantages since they have low utilization these firms can take advantage of elastic brand demand none of the determinants were significantly related to the choice of leader pricing product line pricing strategies bundling complementary product and customer value pricing were more likely to be used by firms which sell substitute or complementary products bundle pricing was used for per sale contract pricing in markets with high levels of brand elasticity complementary product pricing razor and blade was used by firms that enjoyed high profitability on its supplementary sales using customer value pricing a firm offers a stripped down version of its current products to appeal to more price sensitive segments or to leverage new distribution channels this strategy was used to target a narrow segment in high growth markets where price changes are difficult to detect cost based pricing was more likely to be used in marketswhere demand is very difficult to estimate in such a situation cost based pricing makes a great deal of sense in general the results show that the managers pricing strategy choices are consistent with normative pricing research however questions about how managers combine their strategies to arrive at a final price as well as the organizational influences on pricing strategies remain important areas for future research

consumer demand for rice grain quality and returns to research for quality improvement in southeast asia abundant world rice supply has led to renewed interest in improving grain quality of modem rice varieties implicit prices of grain characteristics are estimated for thailand indonesia and the philippines these prices are used to evaluate rice breeding goals and to estimate returns to research for quality improvement results indicate that the past focus on physical quality improvement was appropriate and future welfare gains are possible from chemical quality improvement returns to quality improvement are substantial and indicate underinvestment in this type of research as asian rice production grew faster than population from 1965 to 1980 the real price of rice declined in world markets and several asian countries flinn and unnevehr greater supply and falling prices have increased concern for rice grain quality improvement in national and international research programs in tropical asia khush in this article the consumer goods characteristics model develo ed bv ladd and suvannunt is used to estimaie thedimplicit prices of rice grain quality characteristics in thailand indonesia and the philippines these estimated implicit prices answer three questions a do observed consumer preferences correspond to measures of quality used to screen material in breeding programs b are consumer preferences similar across countries so that quality improvement can be undertaken at the international level c what are the returns to re

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

case for evaluating protection in an economy wide perspective whether protectionism spreads imposing major harm on the world economy depends on three factors the costs and benefits of trade for domestic political actors these actors access to and control over the process of government and the extent to which international commitments and obligations to trade policy are viewed as binding by national governments costs and benefits of protection paris oecd secretariat 1985

economic lot sizing with learning and continuous time discounting is it significant abstract learning curves are a means of representing continuous improvement in firms such improvements bring savings in production costs this may also allow smaller batches to be produced more frequently and hence bring further savings in holding costs earlier research advocated that for more realistic modelling of inventory problems the holding cost should be evaluated means of the internal discount rate of the firm c van deft j p vail international journal of production economics 44 1996 255 265 this paper examines whether when learning is considered it is reasonable to ignore the effect of continuous time discounting of costs by investigating the effect of learning and time discounting both on the economic manufacturing quantity and minimum total inventory cost numerical examples are provided to illustrate the solution procedure for the mathematical model developed although the analysis yields different economic order quantities the difference in cost from the quantities derived using wilson lot size formula is not significant

sensitivity of the eoq model to parameter estimates the economic order quantity eoq model for independent demand is well known to be somewhat insensitive to the choice of order quantity the cost goes up as the square root of the ratio of the actual order quantity to that of the optimal order quantity the question arises as to how sensitive this cost is to parameter estimates this paper extends the work by t j lowe and l b schwarz to show that under minimax and expected value criteria the sensitivity of the cost to the parameters of the model grows as the fourth root of the uncertainty in the values of the parameters furthermore for a wide class of distributions including the beta hence uniform and the gamma hence exponentials a tight bound exists for the expected error

coordinated replenishment strategies in inventory distribution systems in this paper we study the impact of coordinated replenishment and shipment in inventory distribution systems we analyze a system with multiple retailers and one outside supplier random demand occurs at each retailer and the supplier replenishes all the retailers in traditional inventory models each retailer orders directly from the supplier whenever the need arises we present a new centralized ordering policy that orders for all retailers simultaneously the new policy is equivalent to the introduction of a warehouse with no inventory that is in charge of the ordering allocation and distribution of inventory to the retailers under such a policy orders for some retailers may be postponed or expedited so that they can be batched with other retailers orders which results in savings in ordering and shipping costs in addition to the policy we propose for supplying inventory to the retailers we also consider three other policies that are based on these well known policies in the literature a can order policy b echelon inventory policy and c fixed replenishment interval policy furthermore we create a framework for simultaneously making inventory and transportation decisions by incorporating the transportation costs or limited truck capacities we numerically compare the performance of our proposed policy with these policies to identify the settings in which each policy would perform well

production and inventory model using net present value using the net present value is the standard methodology in theoretical analysis and the most frequently used method for making financial decisions however net present value is rarely used in production and inventory decisions the main reasons appear to be the complexity of the formulae and the robustness of the eoq model we investigate the general multiproduct multistage production and inventory model using the net present value of its total cost as the objective function a power of two heuristic gives us a near optimal solution to this problem if the base period is fixed or varied the solution based on the best power of two heuristic will be within 6 2 or 2 1 of the optimal this result is surprisingly similar to models using the long term average cost the average cost does not reflect the time value of money does this mean that decisions based on average cost are significantly inferior to those based on net present value the answer is quite surprising if we include discounted production cost in the holding cost it turns out that the decision based on average cost is only 9 6 in terms of the net present value of the total cost worse than the decision based on the net present value however the reorder interval based on the average cost could be much longer than that derived using net present value this result shows that average cost is a good approximation to the net present value when the demands are deterministic

heterogenous expectations and farmland prices this paper examines the effect of heterogenous expectations about the future among potential farmland buyers it is optimal for each seller to have a reservation price in excess of the value he attaches to the future stream of income attributable to owning the land if he thinks that some potential buyers may be more optimistic than he a formula for the optimal reservation price is presented and a numerical illustration is shown an extremely preliminary empirical test using corn belt and lake state data is made of the importance of optimists in determining land prices for 1968 81

incorporating quantity discounts to the eoq model with transportation costs abstract this article extends a previous economic order quantity eoq model with two modes of transportation namely truckload tl and less than truckload ltl carriers by introducing all units and incremental quantity discount structures into the analysis exact algorithms are developed for each quantity discount structure to compute optimal policies for single stage models over an infinite planning horizon

a game theory approach in seller buyer supply chain in this paper several seller buyer supply chain models are proposed which incorporate both cost factors as well as elements of competition and cooperation between seller and buyer we assume that unit marketing expenditure and unit price charged by the buyer influence the demand of the product being sold the relationships between seller and buyer will be modeled by non cooperative and cooperative games respectively the non cooperative game is based on the stackelberg strategy solution concept where we consider separately the case when the seller is the leader seller stackelberg and also when the buyer is the leader buyer stackelberg pareto efficient solutions will be provided for the cooperative game model numerical examples presented in this paper including sensitivity analysis of some key parameters will compare the results between different models considered

competition competition policy and the gatt the authors argue that further moves to liberalize trade and to implement existing gatt rules and principles may have a greater impact on global competition than would the pursuit of harmonization of competition policy they also suggest that current gatt rules and case law provide scope for disputes to be brought before the gatt that relate to both the application and the nonapplication of existing domestic competition laws of gatt contracting parties this leads to de facto discrimination between domestic and foreign products little use has been made of the gatt in this connection perhaps existing indirect avenues for raising competition related disputes in the gatt should be pursued more actively this would help identify what specific government policies might be the subject of multilateral negotiations and explicitly incorporated into the gatt framework

negotiation arithmetic adding and subtracting issues and parties students of international negotiations often examine strategic interactions among a given set of parties dealing with a specified group of issues the issues and parties themselves are often choice variables whose ultimate configuration can have decisive effects on a bargain s outcome using a variety of international cases i investigate the properties of several classes of moves that are intended to alter the issues and parties of an original negotiation a unified approach to the analysis of such situations suggests numerous distinct means by which the addition or subtraction of issues can yield one sided gains to the use of power can yield joint gains that create or enhance a zone of possible agreement and can reduce or destroy a zone of possible agreement the effects of adding or subtracting parties are similarly analyzed however unintended complexity unforeseen interrelationships organizational considerations transactions costs and informational requirements may alter the analysis of such moves

the importance of learning in the adoption of high yielding variety seeds to date due to the lack of panel data most micro level empirical studies of technology adoption have used cross sectional data these studies cannot examine the dynamic processes of adoption such as learning this article uses panel data to study the adoption of a new high yielding variety seed first it establishes that learning is an important variable in the adoption process second it establishes that cross sectional estimates of a dynamic process are biased but that the extent of this bias may be small third it illustrates the econometric methods needed to estimate a dynamic model when controlling for unobserved household heterogeneity

facility location and capacity acquisition under carbon tax and emissions limits to centralize or to decentralize abstract we investigate the effect of environmental regulations in the form of a carbon tax and command and control legislation on plant capacity and location decisions of a firm in this context command and control involves a limit on the total emissions and penalties for any polluter exceeding this environmental limit while carbon tax involves a variable cost for emissions we also propose two novel policy options that should be considered by policy makers for transportation emissions 1 a per unit per mile transportation penalty and 2 a collective transportation emissions policy with a limit on total transportation emissions that encourages emission and cost efficient facility networks we devise an exact algorithm to solve the arising discontinuous nonlinear integer problem we also consider simplified versions of the problem to gain analytical insights on factors driving the solutions for the more accurate yet complex scenarios we develop a realistic dataset from the auto industry gleaned from publicly available sources to highlight key results of the model through analysis of this representative data we identify the environmental limits and penalties that would drive the company to compliance we find that stricter regulations without high penalties would not assure compliance as the benefits of increased scale associated with a centralized plant frequently outweigh the regulatory penalties at the strategic level a production emissions tax does not encourage companies to reduce production emissions however high lump sum penalties with intermediate limits reduce both regional production and total transportation emissions we find that for regional production emissions while a command and control scheme with a high lump sum emissions penalty is effective in reducing emissions a per unit carbon tax has no effect interestingly the opposite is true for total transportation emissions where we observe that the per unit per mile transportation emissions tax is more effective than a command and control scheme finally we also find that companies with low production pollution low demand or high transportation costs should consider decentralization to comply with the environmental regulations

supplier pricing and lot sizing when demand is price sensitive abstract the problem of co ordination between a vendor and a buyer is formulated as a two person fixed threat bargaining game the vendor decides on his lot size and the price schedule he is to offer to the buyer the buyer decides upon his lot size and the selling price in the market we have characterized pareto efficient solutions and the nash bargaining solution for the problem we have also proposed two pricing schedules for the vendor who is supplying to a large population of buyers the first one is based upon profit sharing the second one resembles the classical all unit quantity discount schedule we have thus provided for the supplier a procedure for setting all unit quantity discount schedule

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

the eqq model with stochastic demand and discounting abstract we generalize bather s eqq model with stochastic demand to the case with discounting we consider two cases one with and one without demand backlogging important implications of discounting are investigated useful insights and formulas are provided

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