precautionary saving in the small and in the large the theory of precautionary saving is shown to be isomorphic to the arrow pratt theory of risk aversion making possible the application of a large body of knowledge about risk aversion to precautionary saving and more generally to the theory of optimal choice under risk in particular a measure of the strength of the precautionary saving motive analogous to the arrow pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving and to give a new interpretation of the dreze modigliani substitution effect copyright 1990 by the econometric society

the importance of firm wage differentials in explaining hourly earnings variation in the large scale sector of guatemala abstract i utilize unique firm based data to examine firm wage differentials among private firms with ten or more workers in the capital area of guatemala city approximately one seventh of the overall hourly earnings variation in this sector is related to firm effects not captured by other observable characteristics of individuals and firms for most variables including observable characteristics of firms used in most previous studies the bias from not including firm fixed effects in the estimation of log wage equations is small in magnitude though statistically significant

the role of international fragmentation in the development process much of what has been written about the process of economic development has concentrated on macroeconomic factors that affect the growth process such as the community s savings rate its ability to attract foreign investment and the composition and quality of its factor endowment base less formally dealt with but nonetheless often cited as important in the development process is the nature of government regulations and the type of institutions that are reflective of the community s own cultural inheritance

on multivariate prudence in this paper we extend the theory of precautionary saving to the case in which uncertainty is multidimensional and we develop a matrix measure of multivariate prudence furthermore we characterize comparative prudence decreasing and increasing prudence the effect of uncertainty on the marginal propensity to consume out of wealth and the dreze modigliani substitution effect in this multivariate setting we also characterize the concept of multivariate downside risk aversion as a multivariate preference for harm disaggregation we show that our definition is equivalent to a positive precautionary saving motive we propose an alternative measure of the intensity of downside risk aversion and show that this measure is useful in understanding several economic problems that involve multivariate preferences

precautionary saving and endogenous labor supply with and without intertemporal expected utility we analyze precautionary saving behavior in a framework with labor and nonlabor income risks an endogenous supply of labor and a representation of preferences that disentangles attitudes towards risk attitudes towards intertemporal substitution and ordinal preferences for consumption and leisure this preference structure allows us to disentangle and to describe in an intuitive way the different forces that determine precautionary saving in the small and in the large

labour supply and saving under uncertainty this article examines how variations in labour supply can be used to self insure against wage uncertainty and the impact of such self insurance on precautionary saving the analytical framework is a two period model with saving and labour supply decisions where preferences are consistent with balanced growth the main findings are that i labour supply flexibility raises precautionary saving when future wages are uncertain and ii uncertainty about future wages raises current labour supply and reduces future labour supply

dynamic analysis of innovation and international transfer of technology through licensing abstract this paper develops a quality ladder type dynamic general equilibrium model with endogenous innovation and technology licensing as a major source of international technology transfer in developing countries examining the dynamic characteristics of the model fully we explore the short and long run effects of both an improvement in the probability of reaching a licensing agreement with a given effort and an increase in the license fee rate the model shows that the former promotes innovation and technology transfers in both the long and short run while the latter discourages them

bargaining with asymmetric information an empirical study of plea negotiations this paper empirically investigates how sentences to be assigned at trial impact plea bargaining the analysis is based on the model of bargaining with asymmetric information by bebchuk 1984 i provide conditions for the nonparametric identification of the model propose a consistent nonparametric estimator and implement it using data on criminal cases from north carolina employing the estimated model i evaluate how different sentencing reforms affect the outcome of criminal cases my results indicate that lower mandatory minimum sentences could greatly reduce the total amount of incarceration time assigned by the courts but may increase conviction rates in contrast the broader use of non incarceration sentences for less serious crimes reduces the number of incarceration convictions but has a very small effect over the total assigned incarceration time i also consider the effects of a ban on plea bargains depending on the case characteristics over 20 percent of the defendants who currently receive incarceration sentences would be acquitted if plea bargains were forbidden

a welfare analysis of global patent protection in a model with endogenous innovation and foreign direct investment abstract this paper constructs a north south quality ladder model in which foreign direct investment fdi is determined by the endogenous location choice of firms and examines analytically how strengthening patent protection in the south affects welfare in the south strengthening patent protection increases the south s welfare by enhancing innovation and fdi but it also allows the firms with patents to charge higher prices for their goods which decreases welfare however the model shows that the former positive welfare effect outweighs the latter negative effect moreover introducing the strictest form of patent protection in the south that is harmonizing patent protection in the south with that in the north may maximize welfare in the south as well as in the north further a similar result can also be obtained in a nonscale effect model

effects of patent protection on optimal corporate income and consumption taxes in an r d based growth model does reducing the corporate income tax accompanied by an increase in the consumption tax to meet the government s budget constraint improve welfare to respond we examine the welfare maximizing corporate income tax and consumption tax rates in an r d based growth model under the constraint that the government s budget is balanced at each point of time further we consider how welfare maximizing tax rates change as patent protection becomes stronger as seen in many countries the results show that as patent protection becomes stronger the corporate income tax rate should be higher and the consumption tax rate should be lower this implies that under stronger patent protection recovering production at the expense of innovation by raising corporate income tax and reducing consumption tax improves welfare

patent protection innovation and technology transfer in a schumpeterian economy abstract this paper analyzes the cross country effects of intellectual property rights ipr protection on the relative wage innovation and technology transfer in a north south quality ladder model with innovative northern r d and adaptive southern r d the degree of ipr protection in two countries differs in terms of patent breadth which determines the markups of northern firms and their southern affiliates respectively in this model stronger ipr protection in the south leads to a permanent decrease in the north south wage gap a temporary increase in the northern innovation rate and a permanent increase in technology transfer by contrast stronger ipr protection in the north leads to a permanent increase in the north south wage gap ambiguous effects on the northern innovation rate and a permanent decrease in technology transfer finally we perform a quantitative analysis by calibrating the model to the us china data and the numerical results support these policy implications in addition to a welfare implication such that strengthening patent protection in one country leads to sizable welfare improvements in both countries

optimal stalling when bargaining this paper analyzes an alternating offer model of bargaining over the sale of an asset in a market such as that for housing in which another agent may come and compete for the right to strike a deal the analysis allows the buyer and seller to have possibly differing views as to how likely such a competition is hence the buyer and the seller disagree about their respective bargaining powers these views adjust to market realizations as the parties learn it is shown that there exists a unique subgame perfect equilibrium which can be explicitly constructed hence conditional on market conditions equilibrium prices and optimal stall lengths that is delay can be found bargaining delay can only occur if there is optimism not pessimism and only if the parties are open to learning as time elapses this delay can occur even for very small levels of optimism and the delay can be for economically significant periods

north south trade with increasing product variety abstract we present a model of one way product cycles in international trade firms develop new product varieties in technologically advanced countries the north other firms copy these products in less developed countries the south and all shifts in production go from north to south what distinguishes this paper from the earlier literature are the model s implications for economic growth and wage determination economic growth is characterized by weak scale effects in contrast to the strong scale effects in the earlier literature the model can also account for large north south wage differences for plausible parameter values

reaping what you sow an empirical analysis of international patent harmonization abstract this paper extends analysis of the gatt uruguay round by quantifying the impact of international patent harmonization as implied by the trips agreement patent harmonization has the capacity to generate large transfers of income between countries the us being the major beneficiary developing countries are major contributors to these transfers but canada the uk and japan also make sizable contributions

intellectual property rights violations and spillovers in north south trade abstract the article examines the role of technological spillovers when northern and southern firms compete in quantities on the common world market and when only the northern firm is supposed to conduct innovative activity the intensity of spillovers is interpreted as an indicator of the strength of intellectual property rights ipr protection in this light the paper reconsiders the questions raised in the recent economic analysis of ipr protection in north south relations when and whether the southern countries benefit in welfare terms from protecting ipr how the north fares in this story how large is the conflict between the north and south and what is the optimal level of ipr protection at the world level the paper shows that the common belief that the south generally benefits from relaxing ipr protection while the north is worse off does not carry over in the applied duopoly model with spillovers in this respect the congruence of interests between north and south with respect to southern ipr protection regime should not be an exceptional or even impossible state of affairs

the welfare cost of one size fits all patent protection to analyze the welfare gain from allowing for differentiated patent protection across sectors this study develops a two sector quality ladder growth model in which patent breadth is a policy variable and derives optimal patent breadth under two patent regimes we show that a uniform optimal patent breadth is a weighted average of sector specific optimal patent breadth and b sector specific optimal patent breadth is larger in the sector that has a larger market size and more technological opportunities to derive the optimal policy we allow for an arbitrary path of patent breadth and derive the optimal path by solving a stackelberg differential game we find that the optimal path of patent breadth under each patent regime is stationary time consistent and subgame perfect finally we perform a numerical investigation and find that even a moderate degree of asymmetry across sectors can generate a significant welfare cost of uniform patent protection

trips trade and technology transfer a north south model of unintentional technology transfer is developed where the stringency of southern patent protection provides the institutional backdrop for a strategic game in a high tech goods market the appropriability regime is set endogenously and combines elements of imperfect southern patent protection with the protection afforded by market made northern technology masking less stringent protection of northern intellectual property can work much like other strategic trade policies therefore developed countries appear to be right in demanding discussion of intellectual property rights in gatt

intellectual property rights and foreign direct investment abstract this paper develops a product cycle model with endogenous innovation imitation and foreign direct investment fdi we use this model to determine how stronger intellectual property rights ipr protection in the south affects innovation imitation and fdi we find that stronger ipr protection keeps multinationals safer from imitation but no more so than northern firms instead the increased difficulty of imitation generates resource wasting and imitation disincentive effects that reduce both fdi and innovation the greater resources absorbed in imitation crowd out fdi reduced fdi then transmits resource scarcity in the south back to the north and consequently contracts innovation

intellectual property rights licensing and innovation in an endogenous product cycle model abstract we develop a dynamic general equilibrium model of the product cycle to study the effects of stronger intellectual property rights iprs in the south on the incentives of firms in the north to innovate and to license advanced technologies innovation and licensing are random processes requiring resources stronger iprs increase the licensor s share of rents and reduce the costs of licensing contracts thus the returns to both licensing and innovation would rise while additional resources would be available for r d in consequence innovation and technology transfer would rise however the effect of stronger iprs on relative wages between regions is ambiguous

bargaining without a common prior an immediate agreement theorem in sequential bargaining models without outside options each player s bargaining power is ultimately determined by which player will make an offer and when this paper analyzes a sequential bargaining model in which players may hold different beliefs about which player will make an offer and when excessive optimism about making offers in the future can cause delays in agreement the main result states that despite this if players will remain sufficiently optimistic for a sufficiently long future then in equilibrium they will agree immediately this result is also extended to other canonical models of optimism

does stronger patent protection increase export variety evidence from us product level data proponents of global intellectual property rights iprs reforms have argued that developing countries weak iprs limit their access to foreign innovative products and technologies central to our understanding of the effects of iprs on product access is the influence of national differences in patent protection on corporate behavior and business strategy of multinational firms using detailed product data on us exports from 1990 to 2000 this research note assesses the impact of strengthening iprs in developing countries on product variety of us exports colonial origin and cross industry variation in patent effectiveness serve to identify the impact the results show that the strengthening of iprs increased exports of new products in patent sensitive industries the expansion in product variety accounted for the entire increase in us exports the findings substantiate claims that ratification of trips by developing countries promotes access to new foreign products and technologies additionally the results demonstrate that patent protection is a significant institutional factor in us firms business decisions over the introduction of new products and processes into a developing country marketplace

technology transfer under asymmetric information licensing contracts for newly patented innovations are observed to vary along several dimensions including the form and size of the payment to the inventor fixedfee versus some output based royalty the degree of exclusivity and the division of rents in this article we show that theform of the contract can be explained by two problems in technology exchange the superiority of a licensor s precontractual information about the economic value of the innovation and thefact that sharing this information with the licensee mayfacilitate imitation we show that a licensor signals her technology type with an output based payment or royalty and may leave some of the rents with the licensee conditions under which exclusive license contracts linear and nonlinear and nonexclusive linear contracts are used to transfer technology are identified

evaluating estimates of materials offshoring from u s manufacturing abstract when materials offshoring is measured by estimating imported intermediate inputs a common assumption used is that an industry s imports of each input relative to its total demand is the same as the economy wide imports relative to total demand this is the so called import comparability or proportionality assumption a report to the national research council identified this assumption as being a significant limitation of current data collection and analysis in this note we move beyond this assumption to obtain a direct measure of imported materials by industry for the united states in 1997 at the 3 digit i o industry level there is a correlation of 0 68 between the offshoring shares made with and without the proportionality assumption and a higher correlation of 0 87 when the shares are value weighted while most value weighted industries have differences below 50 percentage points in the two estimates there are a significant number of cases that differ by 10 percentage points or more

trips trade and growth a two country model of endogenous growth is employed to assess the importance of intellectual property rights to trade growth and technology transfer the paper provides theoretical results linking the intellectual property rights regime to trade patterns aggregate r d worldwide growth and aggregate welfare measures failure to provide patent protection for foreign made innovations forces innovators to employ less than the best practice research technologies reduces aggregate r d activities worldwide effectively eliminates technology transfer across countries and reduces worldwide growth copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

intellectual property rights and the mode of technology transfer abstract transferring technology in an environment where patent protection is uncertain can pose significant risks to an innovating firm s ability to appropriate rents this paper incorporates asymmetric information in a screening game where the innovating firm has the choices of licensing a new product at arm s length to a foreign firm exporting it or licensing it to a subsidiary subsidiary production avoids the risk of imitation but involves higher costs for the innovating firm the gains to the southern country from the lack of intellectual property right protection may be offset by strategic behavior by northern firms who opt for technology transfer via subsidiary or monopoly production

international patent protection 1960 2005 abstract this note provides an update to the index of patent protection published in this journal in 1997 the original paper presented the index for 1960 1990 for 110 countries the index has now been updated to 2005 and extended to 122 countries the adoption of stronger patent laws and the composition of patent rights vary across countries by level of economic development

technological innovations capital mobility and the product cycle innorth south trade this paper constructs a general equilibrium model of north south tradein which the north continually introduces new goods the rate at whichtechnology diffuses to the south is a function of differences in the cost of production in the two regions the key result of the model is that labor force growth in the south initially increases real wages inthe north a standard result in classical trade models but in the long run reduces northern wages by accelerating the transfer of technology and drawing capital out of the north as well copyright 1986 by american economic association

waiting to persuade i analyze a sequential bargaining model in which players are optimistic about their bargaining power measured as the probability of making offers but learn as they play the game i show that there exists a uniquely predetermined settlement date such that in equilibrium the players always reach an agreement at that date but never reach one before it given any discount rate if the learning is sufficiently slow the players agree immediately i show that for any speed of learning the agreement is delayed arbitrarily long provided that the players are sufficiently patient therefore although excessive optimism alone cannot cause delay it can cause long delays if the players are expected to learn

international technology transfer major issues and policy responses international technology transfer emerged as a separate field of inquiry in the 1970s and has since inspired a large literature this paper identifies and reviews the major aspects of the field policy responses of technology supplying firms and nations and of recipient countries are examined directions for further research are indicated

intellectual property rights and quality improvement this paper explores why theories about the effects of intellectual property rights ipr protection on foreign direct investment fdi and innovation have reached mixed conclusions in our model northern firms innovate to improve the quality of existing products and may later shift production to the south through fdi southern firms may then imitate the products of multinationals we find that imitation can increase fdi and innovation for quality improvements whereas the opposite occurs when innovators develop new varieties hence stronger ipr protection by reducing imitation may shift innovation away from improvements in existing products toward development of new products

quality ladders and product cycles we develop a two country model of endogenous innovation and imitation in order to study the interactions between these two processes firms in the north race to bring out the next generation of a set of technology intensive products each product potentially can be improved a countably infinite number of times but quality improvements require the investment of resources and entail uncertain prospects of success in the south entrepreneurs invest resources in order to learn the production processes that have been developed in the north all r d investment decisions are made by forward looking profit maximizing entrepreneurs the steady state equilibrium is characterized by constant aggregate rates of innovation and imitation we study how these rates respond to changes in the sizes of the two regions and to policies in each region to promote learning

the north s intellectual property rights standard for the south abstract we build a multi sectoral north south trade model to analyze international intellectual property rights ipr protection by comparing the nash equilibrium ipr protection standard of the south the developing countries with that of the north the developed countries we find that the former is naturally weaker than the latter moreover we show that both regions can gain from an agreement that requires the south to harmonize its ipr standards with those of the north and the north to liberalize its traditional goods market this demonstrates the merits of multi sectoral negotiations in the gatt wto

patent rights and innovative activity evidence from national and firm level data global standards of patent protection have been strengthened and harmonized in recent years despite the heated policy debates and theoretical controversies empirical studies of the consequences for innovative activity are scant this paper contributes to the debate by providing an empirical analysis of the effects of patent strength on different aspects of innovative activity namely firm level research and development r d domestic patenting and foreign patenting the analysis employs an updated index of patent rights the results show the complexity of evaluating the effects of patent reform on innovative activity since the effects vary nonlinearly depending on the initial level of patent strength and vary by a country s level of economic development overall for developing economies patent strength negatively affects domestic patent filings and insignificantly affects r d and foreign patent filings for developed economies patent strength positively affects r d and domestic patent filings and negatively affects foreign patent filings after some critical level of patent protection is reached journal of international business studies 2007 38 878 900 doi 10 1057 palgrave jibs 8400306

intellectual property rights and foreign direct investment a welfare analysis abstract this paper examines how intellectual property rights ipr protection affects innovation and foreign direct investment fdi using a north south quality ladder model incorporating the exogenous and costless imitation of technology and subsidy policies for both r d and fdi we show that for the interior steady state to be stable either r d or fdi subsidy rates must be positive our findings also indicate that strengthening ipr protection promotes both innovation and fdi moreover a strengthening of ipr protection can also improve welfare if the initial ipr protection in the south is weak and the r d subsidy rate is not too high

the marginal propensity to consume and multidimensional risk abstract kimball 1990a kimball 1990b established that income risk increases the marginal propensity to consume if and only if absolute prudence decreases we characterize decreasing and increasing multivariate prudence and show that a multidimensional risk increases the marginal propensity to consume if and only if absolute prudence decreases with wealth in the sense that its derivative is negative definite

bargaining with optimism identification and estimation of a model of medical malpractice litigation we study a model of bargaining with optimism where players have heterogeneous beliefs about the final resolution beliefs and bargaining surplus are identified from the settlement probability and the distribution of accepted transfers using data from medical malpractice lawsuits in florida we estimate doctor and patient beliefs and the distribution of potential compensation we find that patients are more optimistic and doctors more pessimistic when the severity of injury is higher and the joint optimism diminishes as severity increases we quantify the increase in settlement probability and the reduction in accepted settlement offers under counterfactual caps on the total compensation

identification and estimation of stochastic bargaining models stochastic sequential bargaining models merlo and wilson 1995 1998 have found wide applications in different fields including political economy and macroeconomics due to their flexibility in explaining delays in reaching an agreement this paper presents new results in nonparametric identification and estimation of such models under different data scenarios

on the trade growth and welfare effects of intellectual property rights protection to examine how intellectual property rights protection affects trade growth and welfare i develop a two country r d based growth model in which final goods firms in both countries determine the range of imported varieties in the overall use of intermediate inputs i show that strengthening patent protection in either country increases the range of imported varieties of intermediate goods and stimulates economic growth in the country that strengthened patent protection moreover i also show that the nash equilibrium level of patent protection is stronger than the globally optimal level of patent protection i

globalization outsourcing and wage inequality there is considerable debate over whether international trade has contributed to the declining economic fortunes of less skilled workers one issue that has become lost in the current discussion is how firms respond to import competition and how these responses in turn are transmitted to the labor market in previous work we have argued that outsourcing by which we mean the import of intermediate inputs by domestic firms has contributed to an increase in the relative demand for skilled labor in the united states if firms respond to import competition from low wage countries by moving non skill intensive activities abroad then trade will shift employment towards skilled workers within industries in this paper we extend our previous work by combining new import data from the revised nber trade database with disaggregated data on input purchases from the census of manufactures we construct industry by industry estimates of outsourcing for the period 1972 1990 and reexamine whether outsourcing has contributed to an increase in relative demand for skilled labor our main finding is that outsourcing can account for 31 51 of the increase in the relative demand for skilled labor that occurred in u s manufacturing industries during the 1980s compared to our previous estimate of 15 33 this abstract was borrowed from another version of this item

intellectual property rights multinational firms and economic growth abstract this paper develops a model of north south trade with multinational firms and economic growth in order to analyze formally the effects of stronger intellectual property rights ipr protection in developing countries in the model northern firms invent new higher quality products multinational firms transfer manufacturing operations to the south and the southern firms imitate products produced by multinational firms it is shown that stronger ipr protection in the south i e the adoption and implementation of the trips agreement leads to a permanent increase in the rate of technology transfer to the south within multinational firms a permanent increase in r d employment by southern affiliates of northern multinationals a permanent decrease in the north south wage gap and a temporary increase in the northern innovation rate

international protection of intellectual property we study the incentives that governments have to protect intellectual property in a trading world economy we consider a world economy with ongoing innovation in two countries that differ in market size and in their capacities for innovation after describing the determination of national patent policies in a non cooperative regime of patent protection we ask why is intellectual property better protected in the north than in the south we also study international patent agreements by deriving the properties of an efficient global regime of patent protection and asking whether harmonization of patent policies is necessary or sufficient for global efficiency jel o34 f13 during the 1980 s and early 1990 s the united states and several european countries expressed strong dissatisfaction with what they deemed to be inadequate protection of intellectual property in many developing countries the developed countries made the upgrading of intellectual property rights iprs one of their highest priorities for the uruguay round of trade talks their efforts bore fruit in the agreement on traderelated aspects of intellectual property rights trips which was approved as part of the final act of the uruguay round trips establishes minimum standards of protection for several categories of intellectual property for example in the area of new technology it essentially harmonizes

estimating a bargaining model with asymmetric information evidence from medical malpractice disputes this article uses a unique data set on medical malpractice disputes in florida to estimate the parameters of a bargaining game with asymmetric information the main findings of the article suggest that the bargaining game can replicate most of the qualitative and quantitative features of the data the article also simulates alternative policy regimes to quantify the effects of possible tort reforms such as imposing limits on contingency fees and caps on jury awards

innovation and wage effects of international outsourcing abstract we investigate the effects of increased outsourcing of production to a low wage country such international outsourcing lowers the marginal cost of production and thus increases profits creating greater incentives for innovation a reduction in the resource requirement in adapting technology relative to improving products or an expansion in the portion of production that can be outsourced generates a greater extent of international outsourcing a lower relative wage and a faster rate of innovation an increase in production taxes in the north production subsidies in the south or a subsidy to adapting technologies has similar effects

contracts intellectual property rights and multinational investment in developing countries abstract the policy debate between multinational firms favoring strong contract law and host country governments who often oppose such protection motivates the paper local agents managers learn the multinational s technology and can defect to start a rival firm contract enforcement including binding the multinational itself makes the multinational better off outcomes for the host country are more complex depending on mode switches induced by enforcement if enforcement induces the multinational to switch from exporting to local production welfare improves if local production was occurring anyway enforcement may result in the loss of rents to local agents and lower welfare

patent breadth in an international setting we examine the nash equilibria of a game where two national governments set patent breadth strategically broader patents make r d more attractive but the effect on static efficiency is nonmonotonic in a north south model where only the north can innovate harmonization of patent breadth lowers welfare relative to the nash equilibrium when both countries can innovate harmonization toward narrower patent breadth may raise world welfare jel f02 f13 o3 o31 o32

stage dependent intellectual property rights inspired by the chinese experience we develop a schumpeterian growth model of distance to frontier in which economic growth in the developing country is driven by domestic innovation as well as imitation and transfer of foreign technologies through foreign direct investment we show that optimal intellectual property rights ipr protection is stage dependent at an early stage of development the country implements weak ipr protection to facilitate imitation at a later stage of development the country implements strong ipr protection to encourage domestic innovation therefore the growth maximizing and welfare maximizing levels of patent strength increase as the country evolves towards the world technology frontier and this dynamic pattern is consistent with the actual evolution of patent strength in china

on the concavity of the consumption function at least since keynes 1935 many economists have had the intuition that the marginal propensity to consume out of wealth declines as wealth increases nonetheless standard perfect certainty and certainty equivalent versions of intertemporal optimizing models of consumption imply a marginal propensity to consume that is unrelated to the level of household wealth we show that adding income uncertainty to the standard optimization problem induces a concave consumption function in which as keynes suggested the marginal propensity to consume out of wealth or transitory income declines with the level of wealth