trade and protection in vertically related markets abstract we consider home country tariff and subsidy policies in a setting where a home firm is partially dependent on a foreign vertically integrated firm for supplies of a key input the firms are cournot competitors in the home market for the final product we show that a tariff on final product imports may cause the foreign vertically integrated firm to reduce the price charged for the input under circumstances where a simple monopoly supplier of the input would increase its price supply conditions for the input significantly affect whether imports of the input should be taxed or subsidized

multiproduct lot sizing for finite production rate abstract this article deals with the situation where the producer manufactures several products with given production rates on a single machine only one product can be produced at a time on the machine as an example the producer may use higher or lower quality components in the production also the products may have different holding costs we present a model where the demand appears at discrete points in time and all demand must be met we assume a deterministic varying demand by a production batch we mean a sequence of individual demands that is possible to manufacture in a continuous run to satisfy all the demands on time a production run consists of a sequence of batches there is a fixed set up cost associated with each production run by a production schedule we mean a sequence of run intervals such that each of them is partitioned into parts for each product this paper is concerned with the problem of how to determine the production schedule that minimizes the total production and holding cost over a finite time horizon

targeted export promotion with several oligopolistic industries abstract we study export promotion policies in situations where several oligopolistic industries compete for the services of a sector specific factor of production the partial equilibrium argument for strategic subsidies must be modified to incorporate general equilibrium effects working through the factor market we find that these effects generally weaken the case for profit shifting subsidies in a benchmark case with symmetric exporting industries fixed coefficients technologies and an inelastic supply of the specific factor free trade is shown to be optimal

trade and trade policy with imperfect competition the case of identical products and free entry abstract this paper analyses intra industry trade between economies containing an imperfectly competitive industry in which firms produce a homogeneous output production is subject to increasing returns to scale and there is free entry and exit of firms trade is shown to unambiguously increase welfare by reducing the degree of monopoly in each market and increasing firm size the effects of differences in technology and endowments on the pattern of trade and welfare are examined import tariffs are shown to raise welfare in the country employing the tariff and the welfare implications of various types of industry subsidy are examined

multi product inventory and auxiliary allocation problem abstract a multi item single level joint replenishment inventory problem is considered it consists in scheduling n items over a finite horizon of t periods demands are given and should be satisfied without backlogging the objective is to minimize the sum of production and inventory holding costs over the horizon in each period the total production and inventory holding costs are represented by nonlinear and linear functions respectively an auxiliary allocation problem is studied some relationship to the inventory problem is given and necessary conditions for optimal schedule of n items are discussed a wagner whitin type condition for nonlinear joint replenishment cost is formulated an application to the dynamic lot sizing problem is presented

choosing the right battlefield for the war on drugs an irrelevance result abstract we describe a model where the effectiveness of a specific tax imposed by a government seeking to minimize consumption of some good is independent of whether the tax is imposed at the manufacturing or retail level

cost raising strategies advantage rivals by raising their costs in this paper we show that strategies designed to raise rivals costs have a number of advantages over predatory pricing they are credible do not necessarily require the victim to exit and do not necessarily require the existence of classical market power the paper sets up a general model proves a number of general results and then applies the model to specific strategies involving overbuying inputs and vertical integration

raw materials processing activities and protectionism a country s export sector may encompass a raw material as well as a final commodity that processes that raw material a general equilibrium model is developed in a competitive setting to analyze a nation s optimal strategy in restricting raw materials exports when allowance is made for potential beneficial effects on the export price of processed goods when faced with a foreign tariff on exports of the processed commodity a country s optimal response could entail an easing of raw materials export constraints instead of retaliation illustrations are provided of the 1986 american tariff on canadian exports of cedar shakes and shingles

vertical integration scale distortions partial integration and the direction of price change two new features are introduced in a standard model of forward vertical integration by an intermediate good monopolist into a contestable downstream industry first u shaped average costs replace constant returns in the downstream industry second the effect of subjecting the monopolist to the pressure of upstream entry is explored it is found that monopoly pricing of the intermediate good can distort the scale as well as the input proportions of the downstream firms either distortion leads to integration but here integration may be partial rather than full prices rise with partial integration when there is no upstream entry but prices fall when upstream entry is free

decentralization and transfer pricing under oligopoly this paper presents a simple model of a partially decentralized multinational firm mnf in competition with a rival firm it is shown that transfer pricing can be used as a rent shifting device by the mnf to compete with the rival this arises because the mnf headquarters uses the transfer price to manage different subsidiaries the specific value of the transfer price chosen by the mnf depends on whether the rival firm produces the intermediate good the final good or both and whether the rival is integrated or not in particular both decentralization and competition with a fully integrated rival result in lower transfer prices

trade liberalization and strategic outsourcing this paper develops a model of strategic outsourcing with trade liberalization in the intermediate product market a domestic firm may choose to purchase a key intermediate good from a more efficient foreign producer who also competes with the domestic firm for a final good this has a strategic effect on competition unlike the outsourcing motivated by cost saving the strategic outsourcing has a collusive effect that could raise the prices of both intermediate and final goods trade liberalization in the intermediate good market has a very different effect compared with trade liberalization in the final good market d 2003 elsevier b v all rights reserved

the environmental conundrum of rare earth elements clean technologies such as solar panels and wind turbines help to curb global emissions but they require dirty inputs for their production i e mining rare earth elements rees pollutes local environments rees are also the object of rent shifting strategic trade policies as highlighted by a recent wto ruling against china s quotas and tariffs on exports of rees we construct a three country trade model with an environmental damage function in order to examine the effects of three policies with different implications for the equilibrium quantities of dirty inputs and clean technologies a downstream subsidy an upstream export tariff and an upstream pollution tax we relate the welfare implications of the policies to the parameters of the damage function and to the number of downstream competitors the effects of a unilateral policy switch from an export tariff to a domestic pollution tax as suggested by china s reaction to the wto challenge are also examined

vertical foreclosure and international trade policy international differences in the cost of production of a key intermediate product can mean that a domestic firm is dependent on supplies from a foreign vertically integrated firm this paper considers the incentives for the foreign firm and foreign country to supply the domestic firm when the firms compete in a cournot or bertrand market for the final product the vertical supply decision is significantly affected by domestic supply conditions for the input and a domestic tariff on final product imports optimal policy by the exporting country may require a tax on both exports or a subsidy on both exports countries that are dependent on imports of a key intermediate product or raw material from a dominant world supplier are often concerned about the price and the availability of imports a notable current example involves the computer industry japanese suppliers with the help of the japanese government recently restricted the exports of dram semiconductors substantially raising their price these suppliers control about 80 of the market for semiconductors and the higher prices and shortage in supply have forced u s producers of computers to curtail production and increase prices vertically integrated japanese firms such as toshiba and n e c have benefitted both from increased profits in the export market for semiconductors and from the improvement in their competitive position in the market for final computers as this example indicates the price and availability of imported supplies can depend on both public and private incentives in the exporting country in this paper we first examine the private incentives for a vertically integrated firm to export an intermediate product to a higher cost rival lowering its rival s costs the exporting firm may choose vertical foreclosure thus fully cutting off supplies we then consider the public interest of the exporting country does the exporting country gain by encouraging the export of the intermediate product or alternatively might government foreclosure occur the government is in a position to affect the quantity of exports of both the input and the final product by an appropriate choice of export tax and subsidy policies

the effect of cognitive load on economic decision making a survey and new experiments abstract psychologists and economists have examined the effect of cognitive load in a variety of situations from risk taking to snack choice we review previous experiments that have directly manipulated cognitive load and summarize their findings we report the results of two new experiments where participants engage in a digit memorization task while simultaneously performing a variety of economic tasks including 1 choices involving risk 2 choices involving intertemporal substitution 3 choices with anchoring effects 4 choices over healthy and unhealthy snacks and 5 math problems we find that higher cognitive load reduces numeracy as measured by performance in math problems moreover within subject analysis indicates that cognitive load leads to more risk averse behavior more impatience over money and nominally more likelihood to anchor we do not find any evidence that cognitive load increases impatience over consumption goods or unhealthy snack choices exploiting the panel nature of our data set we find that those individuals who are most sensitive to cognitive load as measured by a large drop in their own math performance across 1 and 8 digit memorization treatments are driving much of the effect

equilibrium vertical foreclosure the authors formulate a complete but analytically simple equilibrium model of vertical mergers to evaluate the logic of standard vertical foreclosure claims and the criticisms made of those claims the model includes incentives of the integrated firm and unintegrated input suppliers to exclude rivals and the potential holdout problem in this fully specified model vertical foreclosure can emerge in equilibrium copyright 1990 by american economic association

vertical mergers and market foreclosure ythe model in this paper illustrates three effects of vertical mergers when both stages are oligopolistic and vertically integrated and unintegrated producers coexist first the merging firm increases its final good output second the resulting backward shift in the residual demand curve facing unintegrated final good producers ylowers their demand for the intermediate good third the merged firm withdraws from the intermediate good market the increased concentration pushes the intermediate good price upward which effect dominates depends on market structure under some conditions a vertical merger causes the price of the final good to increase

international r d rivalry and industrial strategy this paper presents a theory of government intervention which provides an explanation for industrial strategy policies such as r d or export subsidies in imperfectly competitive international markets domestic net welfare is improved by the capture of a greater share of the output of rent earning industries although the subsidy ridden noncooperative international equilibrium is jointly suboptimal behaviour of governments and firms is modelled as a three stage subgame perfect nash equilibrium the assumption that the government is the first player in this game allows it to influence equilibrium outcomes by altering the set of credible actions open to firms

joint replenishment multiproduct inventory problem with continuous production and discrete demands the basic deterministic multi item inventory problem is considered the production rates decision variables are represented by nonnegative functions defined on the interval 0 t t the demands appear at discrete time points the production cost consists of two parts the first is a setup cost which depends on the joint production or joint replenishment rates the minor setup connected with particular items is zero the second part is described by a linear function of the production rates the holding cost is linear an auxiliary allocation problem is considered necessary and sufficient conditions for an optimal allocation are given under these conditions some qualitative properties of the multi item joint replenishment inventory problem are obtained and a method of transformation to a one item problem is given a construction of the optimal allocation is presented

buyer power in international markets this paper investigates the implications for international markets of the existence of retailers wholesalers with market power two main results are shown first in the presence of buyer power trade liberalization may lead to retail market concentration due to this concentration retail prices may be higher and welfare may be lower in free trade than in autarky thus reversing the standard effects of trade liberalization second the pro competitive effects of trade liberalization are weaker under buyer power than under seller power