movements towards free trade and domestic market performance with imperfect competition this paper studies the response of a dominant domestic oligopoly to the reduction in the rate of a protective tariff the issue here is whether domestic market performance is improved through a movement toward free trade alone put another way is free trade always a substitute for competition policy we find that the lower tariff may lead to inferior domestic market performance the direction of the change and its magnitude are functions of the shape of the import supply function the degree of competition between oligopolists and whether or not entry is possible thus there is reason to believe that a strong competition policy may in some markets be complementary to freer trade

competition and unilateral dumping this paper presents an analysis of the effects of market structure on the propensity of firms to dump goods the analysis of brander and krugman is extended to show that in the presence of transportation costs bilateral intra industry trade is not possible without dumping contrary to the conventional wisdom this paper finds that firms in markets with a large number of domestic competitors are more prone to dump unilaterally than firms in less competitive markets this dumping is not predatory but may result in export prices being below average cost

managing technological development lessons from the newly industrializing countries this survey looks at the technological development of the newly industrializing countries to draw some important lessons for firms and governments in other developing countries first inventing products and processes is not at the center of the technological development needed for successful industrialization it is at the fringe what is at the center is acquiring the capabilities needed for efficient production and investment second some countries have overemphasized the drive for technological self sufficiency and paid a high price in poor productivity what makes the best economic sense is to combine foreign and local technological elements and to do this in a way that progressively develops local capabilities in areas where they can be more efficient third the acquisition of technological capability does not come merely from experience though experience is important fourth the economic environment through its influence on the technological efforts of firms is very important in determining the productivity of a country s resources

innovation and productivity across four european countries nber working paper seriesinnovation and productivity across four european countriesrachel griffithelena huergojacques mairessebettina petersworking paper 12722http www nber org papers w12722national bureau of economic research1050 massachusetts avenuecambridge ma 02138december 2006we would like to thank laura abramovsky manuel arellano rupert harrison jordi jaumandreu elizabeth kremp pierre mohnen helen simpson the analysis contained in this paper was fundedby the european commission the esrc and esf under grant res 000 23 0901 and the advancedinstitute of management research aim all errors and omissions remain the responsibility of theauthors the views expressed herein are those of the author s and do not necessarily reflect the viewsof the national bureau of economic research 2006 by rachel griffith elena huergo jacques mairesse and bettina peters all rights reserved short sections of text not to exceed two paragraphs may be quoted without explicit permission providedthat full credit including notice is given to the source

technological capabilities and industrialization abstract this paper reviews the implications for industrial strategy of recent research on technological capabilities at the firm and national levels after exploring the nature and determinants of microlevel technological development a simple framework for explaining the growth of national capabilities is set out based on the interplay of incentives capabilities and institutions each may suffer market failure and so require corrective intervention the experience of some industrializing countries is described to assess the validity of this framework it is concluded that interventions carefully and selectively applied are necessary for industrial success

voracious transformation of a common natural resource into productive capital i analyze a power struggle where competing factions have private financial assets and deplete a common stock of natural resources with no private property rights i obtain a feedback nash equilibrium to the dynamic common pool problem and obtain political variants of the hotelling depletion rule and the hartwick saving rule resource prices and depletion occur too fast so substitution away from resources to capital occurs too fast and the saving rate is too high the power struggle boosts output but depresses sustainable consumption genuine saving is nevertheless zero in a fractionalized society world bank estimates may be too optimistic

comparative advantage under oligopoly we analyze the principle of comparative advantage when agents in the world market are aware of the influence their individual supply exerts on the equilibrium exchange rate of goods we show that specialization following comparative disadvantage can be an oligopoly equilibrium in a ricardian economy moreover for a wide class of economies it is the only one nonetheless when the number of agents in each country increases without limit the equilibrium in which specialization follows comparative advantage again obtains

tariffs versus quotas with strategic investment the relative efficiency of tariffs versus quotas is analyzed in a cournot oligopoly with strategic investment introducing quota licence fees to neutralize the international distributional effect when such licence fees remove quota rents from foreign firms then for the case of constrained entry with a sufficiently large number of firms quotas frequently hold a welfare advantage since tariffs relatively aggravate the inefficiency from overinvestment in the case of free entry and exit however tariffs hold a welfare advantage since there is greater benefit of increasing returns to scale to the economy by avoidance of excessive entry of firms

is the wto passe the wto has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements ptas should economists see this as an efficient institutional hand off where the wto has carried trade liberalization as far as it can manage and is now passing the baton to ptas to finish the job this paper surveys a growing economics literature on international trade agreements and argues on this basis that the wto is not passe rather and subject to some caveats this survey of research to date suggests that the wto warrants strong support while a more cautious view of ptas seems appropriate

oligopoly and trade what how much and for whom abstract this paper integrates the cournot oligopoly model with the ricardian comparative advantage model the ricardian trade pattern is robust and only can be reversed in extreme conditions trade volume increases substantially with increases in competition in world export industries in a symmetrical world a threshold level of competition determines whether capitalists as a group usually gain or lose from trade under all circumstances workers never lose even if a country has a comparative disadvantage in a perfectly competitive world industry but workers gain less in that country than they do in the rest of the world

the distribution of talent and the pattern and consequences of international trade i study the interaction between imperfect labor contracts and international trade in a setting in which workers have private information about their own abilities when an individual s contribution to firm output can be measured accurately in some activities but not in others the most able workers select occupations in which their pay most closely reflects their own performance in a world economy with two otherwise similar countries that have different distributions of talent the country with the more heterogeneous labor force exports the good that is produced by the most talented individuals in this country trade exacerbates the polarization of the labor force and often worsens the distribution of income

disaggregated capital stock estimation for austria methods concepts and results based on a survey of the appropriate literature and on separate investigations concerning distributions of asset lives and depreciation patterns of vehicles gross and net capital stocks as well as depreciation at constant prices and at replacement cost have been estimated for austria using the perpetual inventory method the problem of the limited length of investment time series has tried to be overcome by assigning a fixed age to each initial stock the level of disaggregation for the calculations is onace 2 digit2 and this has been further broken down to the categories buildings machinery and equipment and vehicles all available a priori knowledge and data have been incorporated all estimates of capital stocks and depreciation based on industry level investment data are subject to uncertainty due to the lack of information at the asset type level in order to give a quantitative assessment of this uncertainty for the public as well as for the private enterprise sector several scenarios have been

oil depletion and development in cameroon a critical appraisal of the permanent income hypothesis this paper focuses on medium term policy options in the economic context of natural resource depletion in particular a novel approach for analyzing the impact of the permanent income hypothesis pih with a dynamic recursive computable general equilibrium cge model is employed the model is benchmarked in an oil producing country with declining production namely cameroon the results show that the pih renders public finances less vulnerable during the post oil transition however adopting the pih is not associated with substantial improvements in growth and household welfare in cameroon therefore the pih cannot be the only basis for better management of oil revenues in the country

sorting it out international trade with heterogeneous workers each worker brings a bundle of skills to the workplace for example quantitative and communication skills since employers must take this bundle as a package deal they choose workers with just the right mix of skills we show that international differences in the distribution of worker skill bundles for example japan s abundance of workers with a modest mix of both quantitative and teamwork skills have important implications for international trade industrial structure and domestic income distribution formally we model two dimensional worker heterogeneity and show that the second moments of the distribution of skills are critical as in the roy model

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

a multilevel analysis of innovation in developing countries innovation is a multilevel phenomenon not only characteristics of firms but also environment within which firms operate matter although this has been for long recognized in the literature a quantitative test that explicitly concerns the hypothesis that framework conditions affect innovativeness of firms remains lacking using a large sample of firms from many developing countries we estimate a multilevel model of innovation that integrates explanatory factors at different levels of the analysis apart from various firm s characteristics national economic technological and institutional conditions directly predict the likelihood of firms to innovate

on the intergenerational allocation of natural resources it is known hartwick and others that under standard assumptions a society that invests in reproducible capital the competitive rents on its current extraction of exhaustible resources will enjoy a consumption stream constant in time it is shown here that this result can be interpreted as saying that an appropriately defined stock of capital including the initial endowment of resources is being maintained intact and that consumption can be interpreted as the interest on that patrimony this seems like a useful rule of thumb for policy

rent shifting and rent sharing a re examination of the strategic industrial policy problem this paper reexamines the market structure problem in the strategic trade policy literature it is shown that rent sharing between the home union and the home firms raises total home industry rents regardless of whether the international duopoly is cournot or bertrand furthermore home welfare also rises with cooperation if the international industry consists of more than two firms if the industry is faced with entry and if there is domestic consumption this paper shows that rent sharing can be a robust strategic industrial policy and can be interpreted as a solution to the market structure dilemma

the hartwick rule myths and facts we shed light on the hartwick rule for capital accumulation and resource depletion by providing semantic clarifications and investigating the implications and relevance of this rule we extend earlier results by establishing that the hartwick rule does not indicate sustainability and does not require substitutability between man made and naturalcapital we use a new class of simple counterexamples i to obtain the novel finding that a negative value of net investments need not entail that utility is unsustainable and ii to point out deficiencies in the literature

the first review of european union antidumping reviews the literature on antidumping ad has documented various aspects of this protectionist tool however a peculiar feature of ad has not received much attention these measures are endogenous to the behaviour of the exporting firms which can adjust the dumping margin by changing their export price and ask the authority to amend the ad measures accordingly the objective of this paper is to fill part of this gap in the literature by analysing the ad reviews conducted by the european union for affirmative petitions initiated in 1980 2009 to this end a novel data set of all such reviews has been assembled summary statistics reveal that more than a third of all petitions concluded with the imposition of ad measures are reviewed at least once before their expiration and most reviews lead to lower ad duties although almost 20 per cent of the firms investigated through interim reviews see their duties increase there are significant differences in the outcome of the reviews depending on the party requesting them i e reviews lodged by european producers are less likely to lead to lower duties these conclusions are confirmed by the econometric analysis which also shows that chinese firms see their duties reduced significantly less than those of firms from other countries

an international multilevel analysis of product innovation this paper studies multilevel determinants of product innovation by incumbent firms with data from 68 countries covering over 25 000 firms in eight manufacturing sectors the author assesses the predictions of interdisciplinary research on firm behavior in different contexts which have emphasized that product innovation is affected by three sets of factors the extent of global engagement information spillovers and market structure the empirical model of the probability of observing a product innovation a probit model by a firm considers three levels of analysis firm characteristics industry characteristics and the national context the econometric evidence supports the global engagement and information spillovers hypotheses but the evidence on the role of market structure is mixed regarding global engagement the evidence suggests that product innovation by incumbent firms is positively correlated with the act of investing in r d and licensing of foreign technologies and country level average import tariffs reduce the probability of product innovation regarding information spillovers the evidence also shows that a country s patent density is positively correlated with product innovation in contrast concerning the market structure hypotheses country level indicators of business density and of policy induced costs of entry are not robustly correlated with product innovation

competitive versus comparative advantage i explore the interactions between comparative competitive and absolute advantage in a two country model of oligopoly in general equilibrium comparative advantage always determines the direction of trade but both competitive and absolute advantage affect resource allocation trade patterns and trade volumes competitive advantage in the sense of more home firms drives foreign firms out of marginal sectors but also makes some marginal home sectors uncompetitive absolute advantage in the sense of a uniform fall in home costs tends to raise home output in all sectors but also leads both countries to specialise less in accordance with comparative advantage

factor intensities and factor substitution in general equilibrium abstract this article examines how factor intensity rankings between industries and the economy wide asymmetry in the degree of factor substitution combine to influence the manner in which changes in relative commodity prices affect the factoral distribution of income the reciprocal influence of factor endowment changes on the composition of outputs is also discussed the analysis is undertaken in a general three factor two commodity framework the minimal sized model that allows both influences to affect factor prices and admits of the possibility of complementarity between factors factors which are good substitutes find their returns behave somewhat similarly when commodity prices change while factors which are complements experience strongly asymmetrical fortunes a crucial role is played by a comparison of the share of the middle factor in each sector

capital accumulation and resource depletion a hartwick rule counterfactual how rich would resource abundant countries be if they had actually followed the hartwick rule invest resource rents in other assets over the past 30 years the authors use time series data on investments and rents on exhaustible resource extraction for 70 countries to answer this question the results are striking gabon trinidad and tobago and venezuela would all be as wealthy as the republic of korea while nigeria would be five times as well off as it is currently the authors also derive a more general rule for sustainability maintain positive constant genuine investment and use this to draw further empirical results

tariff limit pricing relative plant scale and the eastman stykolt hypothesis this paper provides a formal basis for the widely held proposition sometimes called the eastman stykolt effect that the interaction of tariff protection and small domestic market size prevents canadian firms from achieving scale efficiency it considers a free entry cournot nash equilibrium in a homogeneous goods industry protected by tariffs the model demonstrates that the tariff limit pricing effect can arise without appeal to collusion or product differentiation moreover it is not appropriate to test for the eastman stykolt effect by simply including the interaction of market size and tariffs in a regression explaining relative plant scale

the missing link the ricardian approach to the factor endowments theory of trade this paper views all interpersonal trade as ricardian while all international trade reflects each country s factor endowment the model provides the logical link betwe en heckscher ohlin and ricardo the strength of the model is that it allows simpler and more robust theorems about trade welfare and fac tor payments factor price equalization holds universally and stolper samuelson is not tied to the number of goods or factors a key resul t is that the old mill theorem that the small country gains all from trade is incorrect trade patterns with three factors and two goods a re completely characterized copyright 1988 by american economic association

import share under international oligopoly with differentiated products japanese imports in u s manufacturing this paper seeks to identify the determinants of the japanese impor t share in the u s market from the assumptions of international oligopoly and internationally differentiated products a theoretical model is developed where import share is considered as a cournot nash equilibrium the relative position of the reaction functions is determined by the previous commitments of both domestic and foreign firms on advertising r d and tangible investment as well as by artificial and natural trade barriers using a sample of twenty four three digit import competing u s industries matched to japanese industries the empirical analysis provides evidence supporting the model s predictions that the relative strategic expenditures and market structures of both partners explain the japanese import share in u s markets copyright 1988 by mit press

welfare costs of the u s antidumping and countervailing duty laws abstract the antidumping ad and countervailing duty cvd laws in the united states have become the most pervasive form of import relief sought by domestic producers this paper estimates the collective economic effect of the hundreds of active u s ad cvd orders using a computable general equilibrium model we estimate that the collective net economic welfare cost in 1993 of these orders to be 4 billion this welfare estimate is sensitive to various modeling assumptions which are explored in the paper with the implementation of the uruguay round agreements the ad cvd laws remain one of the costliest programs restraining u s trade

a general approach to welfare measurement through national income accounting a framework is developed for analyzing national income accounting using a revealed welfare approach that is sufficiently general to cover both the standard discounted utilitarian and maximin criteria as special cases we show that the basic welfare properties of comprehensive national income accounting previously ascribed only to the discounted utilitarian case extend to this more general framework in particular under a wider range of circumstances it holds that real nnp growth or equivalently a positive value of net investments indicates welfare improvement we illustrate the applicability of our approach in the dasgupta heal solow model of capital accumulation and resource depletion

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

anti dumping and countervailing duties under oligopoly abstract this paper constructs a conjectural variations model of international oligopoly in which the home country s optimal policy responses to the foreign government s subsidies and foreign firms dumping can be calculated some theoretical support is found for tariffs that countervail part of the foreign export subsidy the optimal fraction depends on the size of own and cross effects in demand and on the extent of market competition however no normative case is found for anti dumping duties

assessing alternative options for allocating oil revenue in iran abstract the present paper focuses on medium term effects of alternative windfall management strategies for a resource abundant country where the resource revenues are expected to last over a prolonged period in particular the trade off between spending and saving is analyzed within the framework of a recursive dynamic computable general equilibrium model the model is further validated against historical data available for 2001 2010 the total factor productivity is calculated endogenously in the model based on a function that reflects the changes in factor productivity the results suggest that saving oil revenues whether in an oil fund or through physical investment in domestic sectors leads to a higher economic growth however physical investment is superior in the short to medium term based on the resultant gdp while creating an oil fund might be more beneficial in the post oil era

accounting for innovation and measuring innovativeness an illustrative framework and an application the purpose of this paper is to propose and illustrate an accounting framework for innovation we characterize the intensity of innovation by a sales weighted measure of innovation the share of sales in innovative products but other output indicators of innovation could be considered as well comparing statistics on the share of innovative sales across countries industries or firms measures but does not explain the intercountry interindustry or interfirm differences in innovation intensity to have a more meaningful basis of comparison we need a model if an exact model of innovation in its various dimensions existed and if we knew it we would be able to understand fully why innovation differs among countries industries or firms of course such a model does not exist nevertheless it is worth trying to account for innovation differences if only very roughly in such an endeavor what remains to be explained is as important to consider as what can be explained because it reflects the extent of innovative ability or capacity or innovativeness to motivate our approach better and make it more explicit we find it appealing to draw a comparison with the standard framework for growth accounting and the underlying model of a production function production output is viewed as resulting from a process of transformation of inputs into output that can be represented and analyzed in terms of a production function based on the production function an accounting framework can be constructed in which changes in output between periods years decades or differences between spatial units firms industries countries are ascribed to changes or differences in the inputs and in a residual that is known as total factor or multifactor productivity tfp or mfp or simply productivity likewise innovation output can be viewed as resulting from innovation inputs such as r d efforts and other contextual determinants such as the pressure of competition this linkage can be represented in terms of an innovation function and an innovation accounting framework on the basis of which changes in innovation output between periods or differences between spatial units can be ascribed to changes or differences in the factors of innovation and in a residual that we call innovativeness or the unexplained ability to turn innovation inputs into innovation output innovativeness is thus to innovation what tfp is to production innovativeness is conditional on a model of an innovation function and a set of factors of innovation just as tfp is conditional on an assumed specification of the production function and measured factors of production both correspond to omitted factors of performance such as technological organizational cultural or environmental factors and to other sources of misspecification errors although tfp is commonly interpreted as being mainly an indicator of technology the produc

the regulation of labor author s botero juan djankov simeon la porta rafael lopez de silanes florencio shleifer andrei abstract we investigate the regulation of labor markets through employment collective relations and social security laws in 85 countries we find that the political power of the left is associated with more stringent labor regulations and more generous social security systems and that socialist french and scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries however the effects of legal origins are larger and explain more of the variation in regulations than those of politics heavier regulation of labor is associated with lower labor force participation and higher unemployment especially of the young these results are most naturally consistent with legal theories according to which countries have pervasive regulaory styles inherited from the transplantation of legal systems

a technology gap approach to why growth rates differ abstract this paper contains a discussion and test of the technology gap approach to development and growth the basic hypotheses of the theory are tested on pooled cross sectional and time series data for 25 industrial countries for the period 1960 1983 the sample includes in addition to 19 oecd countries 6 of the most important industrial economies from the non oecd area the findings of the paper confirm that there exists a close correlation between the level of economic development measured as gdp per capita and the level of technological development measured through r d or patent statistics furthermore for the group of 25 countries as a whole technology gap models of economic growth are found to explain a large part of the actual differences in growth rates both between countries and periods as expected both the scope for imitation growth in innovative activity and efforts to narrow the gap investment appear as powerful explanatory factors of economic growth however when the non oecd countries and later usa and japan are removed from the sample the explanatory power of the technology variables especially growth in innovative activity diminishes

genuine savings leading indicator of sustainable development abstract the world bank recently began publishing estimates of countries genuine savings a comprehensive measure of net investment across all forms of capital natural and human as well as produced this article presents the first empirical investigation of the consistency of the bank s estimates with the hypothesis that net investment should equal the difference between a country s average future consumption and its current consumption results show that the bank s estimates are consistent only with weak versions of this hypothesis and then only for developing countries moreover a simple autoregressive integrated moving average arima model outperforms any net investment measure comprehensive or conventional as a predictor of the difference between current and future consumption in sum the bank s net investment estimates tend to move in the same direction as the difference between current and average future consumption in developing countries but they have little value for predicting the mag

on the evolution of comparative advantage in matching models abstract this paper examines whether comparative advantage is the long run outcome of an evolutionary process in the open economy it formalizes the notion that natural selection eliminates inefficient firms and thus leads to stable and perhaps efficient patterns of world trade instead of assuming the existence of a walrasian auctioneer we study two simple matching processes that coordinate trade between firms our central result is that specialization according to comparative advantage with the larger country possibly incompletely specialized is the unique evolutionarily stable state of the world economy

complementarities in innovation policy this paper develops a framework for testing discrete complementarities in innovation policy using european data on obstacles to innovation we propose a discrete test of supermodularity in innovation policy leading to a number of inequality constraints we apply our test to two types of innovation decisions to innovate or not and if so by how much we find that the evidence regarding the existence of complementarity in innovation policies depends on the phase of innovation that is targeted getting firms innovative or increasing their innovation intensity as well as on the particular pair of policies that is being considered the two phases of the innovation process i e the probability of becoming an innovator and the intensity of innovation are subject to different constraints interestingly there seems to be a need to adopt a package of policies to make firms innovate while a more targeted choice among policies is necessary to make them more innovative

demand pull instruments and the development of wind power in europe a counterfactual analysis renewable energy technologies are called to play a crucial role in the reduction of greenhouse gas emissions since most of these technologies did not yet reach grid parity public policies have been implemented in order to foster their deployment the approach that has been privileged in europe is the demand pull approach that aims at creating a demand for these new technologies and at stimulating their diffusion this paper examines the effect of demand pull policies on the diffusion of onshore wind power technology in six european countries denmark france germany italy portugal and spain in a first step a micro founded model of diffusion is calibrated in order to replicate the observed diffusion of wind power in these six countries in a second step a counterfactual analysis is conducted by investigating several scenarios by taking into account the complex self sustained dynamics of diffusion and the learning spillovers that operate in the wind power sector we can derive several insights about demand pull policies first the impact of a demand pull policy on the diffusion of wind power is determined by the stage at which it comes to support it the effect seems to be stronger at the beginning of the diffusion second international spillovers do operate in the wind power sector these international spillovers however are not strong enough to foster the diffusion of wind power in a country having no demand pull support we can derive from these two statements that a strategy consisting in not implementing any demand pull policy with the expectation that international spillovers will reduce the cost of wind power and foster the diffusion of the technology that then shall become competitive is not a good option for a country targeting a high share of wind power in its energy mix

resource depletion and sustainability in small open economies abstract exogenous price changes affect the amount that a small country exporting natural resource commodities must invest to sustain its consumption level the necessary amount is given by the difference between hotelling rent and the discounted sum of future terms of trade effects capital gains the latter term is found to be large relative to the former in the case of petroleum depletion in indonesia this suggests that resource rich countries will need to invest more than previously expected to sustain their consumption levels if natural resource prices continue their long term historical decline

international competition downsizing and wage inequality a country with cournot competition and free entry experiences an increase of its market size either due to economic growth or international integration of its goods markets this implied increase in competition leads to shrinking mark ups and forces firms to reduce overhead costs relative to output this implies a reallocation at the aggregate level from administrative to productive activities relative factor rewards change and wage inequality increases the factor which loses in relative terms can even lose in real terms from a quantitative perspective international competition is demonstrated to be the more plausible cause of rising wage inequality c 2007 published by elsevier b v

on the welfare significance of green accounting as taught by parable abstract green nnp is a national accounting concept that subtracts off from gnp not just depreciation of capital but also depletion of environmental assets for a time autonomous technology green nnp has a rigorous welfare interpretation as an exact measure of the economy s future power to consume the present paper extends the standard framework to cover the case of labor augmenting technological progress for this special case of time dependence a powerful conceptual parable applies it is as if the conclusion from a simple minded welfare story told by the standard neoclassical one sector growth model covers a far more general situation involving any number of different types of capital any convex production possibilities set and fully optimizing behavior implications and applications are discussed

the gains from specialization and population size abstract this note combines three ideas the association of more people with new goods the comparative advantages of individuals and economic happiness people may not be happier in a larger knowledge economy but the gains from specialization are necessarily larger

the markup and inflation evidence in oecd countries in this paper we evaluate the dynamic inconsistency argument put forth by kydland and prescott 1977 and barro and gordon 1983 as an explanation for differences in the average inflation experience across oecd countries the focus is on the empirical evidence relating the overall degree of competition among firms as measured by the markup of price over marginal cost and inflation over the 1973 88 period the prediction is that higher markups raise the monetary authority s incentive to increase output leading to higher equilibrium rates of inflation we find that the markup does well in explaining cross country differences in average inflation jel classification e31 e58 d43 l ecart du prix par rapport au cout marginal et l inflation resultats pour les pays de l ocde ce memoire examine l argument mis de l avant par kydland et prescott 1977 et barro et gordon 1983 pour expliquer les differences dans le taux moyen d inflation entre les pays de l ocde on porte une attention speciale aux resultats empiriques qui relient le degre general de concurrence entre les entreprises mesure par l ecart du prix par rapport au cout marginal et le niveau d inflation entre 1973 et 1988 la prediction est que des ecarts prix cout marginal plus eleves augmentent l incitation des autorites monetaires a accroitre le niveau de production ce qui entraine des taux d inflation d equilibre plus eleves il s avere que l ecart du prix par rapport au cout marginal tend a expliquer bien les differences dans le niveau moyen d inflation entre pays

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

tax competition in imperfectly competitive markets abstract the literature on strategic trade policy has shown that in imperfectly competitive markets governments have an incentive to subsidize exports of their own firms yet the consequence of the departure from laissez faire is a wasteful subsidy race in contrast this paper shows that even in imperfectly competitive markets there is a strong tendency for laissez faire to prevail the driving force is the firms willingness to exploit tax or subsidy differentials by relocating production a small tax differential induces firms to change their place of production the change in market structure has a negligible effect on the oligopoly equilibrium but a non negligible impact on government revenues when tax policy is non discriminatory governments gain lose by attracting all firms when production is taxed subsidized hence laissez faire is the only equilibrium since from the point of view of the two producing countries laissez faire nondiscrimination pareto dominates the intervention equilibrium discrimination nondiscrimination is a simple device to result in a mutual beneficial outcome

entry and entry deterrence in penetrable markets this paper presents a game theoretic model of entry a potential entrant into a given market is postulated to be a currently produci ng firm whose product is a substitute on the production side for the good being sold in the market an entrant is capable of switching pr oduction between markets faster than firms in general can adjust thei r total outputs to some extent a market faced with entry as such wi ll resemble a contestable market and limit pricing behavior will occ ur copyright 1988 by the london school of economics and political science

investing exhaustible resource rents and the path of consumption we set out dollar valued net national product for an economy with a wasting essential stock oil deposit we take up maintaining capital intact and locally unchan ging consumption the percentage change in net investment or genuine savings relative to the market rate of interest denotes whether current consumption is rising

effects of the customs union with the european union on the market structure and pricing behaviour of the turkish manufacturing industry turkey established a customs union with the european union in 1996 this study aims to analyse the effect of that customs union on the market structure and the pricing behaviour of the turkish manufacturing industry for the period 1994 to 2000 to that end the price cost mark up equation of 12 manufacturing industry sectors is estimated using the import and export ratios with european union countries together with control variables a second equation is also estimated for the concentration ratio index taking the trade ratios with european union countries as explanatory variables the estimation method is panel data covering eight years and 12 cross section units estimation outcomes indicate that the export and import ratios of trade with european union countries have a negative relation with the price cost mark up in the manufacturing sector it is concluded that increased imports with union countries have created a positive wealth and efficiency effect upon the turkish manufacturing industry due to f