the political economy of trade institutions of protection d omestic support for a liberal commercial policy in the u s rests on a commonly accepted set of rules and norms these rules and norms best characterized as a defense of free and fair trade arise from two different traditions the first originated as a political reaction to high trade barriers preceding the great depression central decision makers took as a lesson from the depression period that short term political forces should not determine the level of state intervention into the market the second to protect against unfair trade emanates from a long history of state support for industries that claim foreign producers are pursuing unfair predatory practices established in statute before the depression these rules did not fundamentally change in the postwar period together these decision rules are used to interpret american trade protectionism

policy rivalry among industrial states what can we learn from models of strategic trade policy the economic theory of international trade has changed dramatically over the last decade by admitting into its mainstream a body of literature that focuses on the implications of monopolistic and oligopolistic elements in international markets by applying the tools of the new industrial organization in an international context two new classes of models have emerged models of intra industry trade and models of strategic trade policy the policy implications of models of strategic trade policy were quite disturbing for the economics profession since these models demonstrated that the classical harmony between national and cosmopolitan welfare maximization does not exist if one assumes opportunities for strategic manipulation of oligopolistic international industries this article reviews two prominent models of strategic trade policy the brander spencer model and the krugman model and relates them to more familiar earlier concepts such as stackelberg s asymmetrical duopoly solution and the venerable infant industry argument for government intervention the primary purpose of this article however is to provide a synopsis of the large literature addressing the question of whether models of strategic trade policy can give guidance for government policy

marshall and complexity a necessary balance between process and order according to alfred marshall economics is a complex science which deals with a very compound matter the concept of equilibrium is very widely referred to in his writings not only as a tool to be used in the analytical apparatus as is usually stressed but also and more important as an element that characterises the evolutionary framework of his analysis in the marshallian investigation of economic and social matters the term equilibrium indicates an indispensable degree of order whereas evolution denotes a vital continuous process that characterises every economic and social body the particular relation between equilibrium and evolution which characterises marshall s approach allows us to better understand the balanced interplay between order and process two categories that in marshall pervade every aspect of society considered as a highly complex body

a test of a theory of strategically retaliatory trade barriers within a game theoretic lobbying model the formation of strategic trade barriers is examined trade barriers are modeled as comprising a political component as well as a strategically retaliatory component that serves to deter foreign protectionism within this theoretical framework the optimal policy is to erect retaliatory barriers against all imports even though the partner country protects only a subset of goods that are traded the theory is described and tested using cross industry u s nontariff barrier ntb data against nine developed countries in 1983 a three equation simultaneous tobit model is estimated for this purpose whether u s ntbs against these partner countries are retaliatory and if so whether the cross industry structure of protection validates the predictions of the theory are empirically addressed

four theories of public policy making and fast breeder reactor development the recent revival of the discipline of political economy challenges purely economic explanations of economic growth technological innovation and sectoral change this approach recognizes that political actors institutions and strategies to organize the economic process together shape the economic development of industrial societies whereas economists have emphasized determinants of growth such as savings and investment rates degrees of domestic and international competition in an industry or the supply of labor the new political economists view the political definition of property rights the nature of state intervention in the economy the resources of politically mobilized groups and political actors belief systems as critical determinants of economic transformations both economists and political economists however share the assumption that actors are rational they pursue their interests in a calculated manner within a given system of institutional constraints

unfair trade practices the case for a differential response trade distorting practices by other states did not seriously affect u s commercial interests until the mid 1960 s however growing overall and sectoral trade deficits as well as rapid changes in trading patterns have made such practices a more salient political issue the modal and preferred american policy response has been to rely on u s supported liberal institutions notably the general agreement on tariffs and trade gatt to provide a framework for multilateral negotiations designed to eliminate

strategic trade and investment policies implications for the study of international political economy b usiness gurus point out that successful firms often carefully strategise about what to sell where to sell how to sell and how and where to manufacture their goods and services suppose a country drawing inspiration from such firms were to formulate a set of economic policies to become globally competitive in leading economic sectors how specific or encompassing would such policies be and what might be the justifications for them even though the theory and practicality of such policies the strategic trade and industrial policies stips is contested they retain their appeal for politicians and policymakers in this paper we discuss how and why stips have created a new agenda for the study of international political economy state intervention to directly guide industrial activity is called industrial policy and to guide foreign trade is called trade policy industrial policies differ from macroeconomic policies in that they target only a subset of the economy whereas macroeconomic policies such as tax rates level of deficit spending and interest rate policies generally do not discriminate among types of firms or industries industrial policies such as r d subsidies tax subsidies preferential loans and credit allocations are targeted at specific firms or industries

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

tariffs with private information and reputation abstract several tariff games are examined in which the home country has private information about whether its government is a low or high tariff type if the foreign government is uncertain about this type in a one shot game its nash equilibrium tariff will be lower higher than if it knew the home government were a low high tariff type in two multistage games misleading behavior by the home government is an equilibrium strategy for sufficiently high discount factors whether or not uncertainty is persistent is important for welfare results tariff rules do not necessarily dominate discretionary policy in these models

the impact of china s electricity price deregulation on coal and power industries two stage game modeling abstract the regulated price mechanism in china s power industry has attracted much criticism because of its incapability to optimize the allocation of resources to build an open orderly competitive and complete power market system the chinese government launched an unprecedented marketization reform in 2015 to deregulate the electricity price this paper examines the impact of electricity price deregulation at the industry level we first construct two stage dynamic game models to portrait the interaction between the coal and coal fired power industries using the models we compare analytically the equilibriums with and without electricity price regulation concerning electricity price electricity generation coal price and coal production the theoretical analyses find three regulated electricity price intervals that differentiate the reform impacts afterward we collect empirical data to estimate the model parameters the influences on the two industries in terms of market outcome and industrial profitability are simulated our results suggest that the current regulated electricity price falls within the medium interval which means deregulation will result in higher electricity price but lower coal price less coal production and less electricity generation the robustness analyses show that our results hold with respect to the electricity generation efficiency and price sensitivity of electricity demand

oligopolistic behavior by public agencies in international trade the world wheat market a model of the world wheat market is presented which treats public policies as endogenous the oligopolistic nature of international wheat trade is captured by assuming policy makers form conjectures on the slope of the excess demand function they face and use that information to determine domestic and trade policies the policies reflect differing influences of political interest groups a u s crop shortfall scenario illustrates the different results with endogenous policies compared to the traditional model

trade policy cross border externalities and lobbies do linked agreements enforce more cooperative outcomes abstract we analyze whether linking international cooperation in trade policy to environmental policy or other issues with nonpecuniary externalities promotes more cooperation in both policies or whether cooperation in one is strengthened at the expense of the other in the context of self enforcing agreements we show that if the policies are independent in the government s objective function then linkage promotes cooperation in one policy at the expense of the policy that is easier to enforce under no linkage however if the linked policies are not independent and if these policies are strategic complements then linkage can sustain more cooperation in both issues than no linkage the policies are strategic complements only if i the production externality has cross border effects ii the weight on the externality cost is high iii import competing lobbies are not powerful

economics and the self organisation approach alfred marshall revisited the economics of alfred marshall is reassessed in the light of new developments in the natural sciences whereby a nonequilibrium thermodynamic approach is adopted to analyze self organization in dissipative structures it is argued that there is a clear correspondence between marshall s treatment of time irreversibility and this modern approach particularly when the latter is set in an informational context thus his principles is viewed as a very useful starting point in adapting the self organization approach for application in economics the main features of such a post marshallian approach to economics are discussed and compared with the mechanical approach of neoclassicism copyright 1993 by royal economic society

the state and american trade strategy in the pre hegemonic era trade policy is commonly seen as a product of domestic interest group politics despite the obvious economic distortions introduced by trade barriers protectionism recurs we are often told because producers organize more readily than consumers and dominate the political process in this demand side explanation of protection the state is seen as the empty receptacle of societal bargaining with no independent voice or role

dea approach for unified efficiency measurement assessment of japanese fossil fuel power generation this study discusses a new dea data envelopment analysis approach to measure the unified operational and environmental efficiency of energy firms it is widely known that they produce not only desirable good outputs e g electricity but also undesirable bad outputs e g co2 as a result of their plant operations the proposed approach incorporates an output separation desirable and undesirable outputs for the performance evaluation of energy firms in addition to the output separation this study separates inputs into energy and non energy inputs consequently the proposed approach incorporates not only the output separation but also the input separation within a computational framework of dea non radial measurement this study compares the proposed approach with other previous dea approaches used for the performance evaluation of energy firms after the methodological comparison this study applies the proposed approach for measuring the unified efficiency of japanese fossil fuel power generation this empirical study confirms that the implementation of kyoto protocol 2005 has not been effective on the unified efficiency of japanese fossil fuel power generation during the observed period 2004 2008 although the empirical result is inconsistent with the current japanese environmental policy under kyoto protocol it contains policy implications for guiding the future direction of japanese environmental policy on the electric power industry

systematic departures from the frontier a framework for the analysis of firm inefficiency departures from a production or cost frontier may reflect the systematic effect of conditions that contribute to inefficiency to test whether some portion of frontier function departures can be systematically explained the frontier inefficiency error component is modeled as a function of various causal factors and a random component the functional form of the inefficiency error term model is chosen to assure strict one sidedness preliminary empirical results generated from electric utility data suggest the superiority of including both systematic and random components in the inefficiency error term

the free trade epidemic of the 1860s and other outbreaks of economic discrimination why was there an abrupt increase in economic openness in europe in the 1860s this increase may have been the result of a contagion process in which the cobden chevalier treaty between britain and france threatened to displace third party exports to fra nce with british exports as a result most european states signed similar treaties with france which had further ripple effects this article outlines a formal model of this process based on the assumption that an agreement between two states incre ases the desirability of similar treaties to third parties propositions regarding the rate and pattern of spread of treaties are derived from this model this article then discusses the insights these propositions may offer into the rise and fall of the most favored nation network of treaties between 1860 and 1929 at a theoretical level the model aims to link the microlevel processes underlying state preferences to system level phenomena at a substantive level this analysis offers insight into the current explosion of regionalism

cooperation in the liberalization of international trade after hegemony what nations dwell in perpetual anarchy for no central authority imposes limits on the pursuits of sovereign interests because as states they cannot cede ultimate control over their conduct to an supranational sovereign they cannot guarantee that they will adhere to their promises the possibility of a breach of promise can impede cooperation even when cooperation would leave all better off yet at other times states do realize common goals through cooperation under anarchy

review on the costs and benefits of renewable energy power subsidy in china abstract nowadays renewable energy plays a vital role in the sustainable development of a society in china renewable energy power has developed rapidly since the implementation of renewable energy act through a series of specific incentive measures especially subsidy policies china s renewable energy power has made great achievements both in technology and application based on the state of the art of renewable energy power this paper comprehensively analyzed the costs and benefits of renewable energy power subsidy in china the analysis results show the cost of renewable energy power subsidy was 0 248 cny kwh between 2006 and april 2011 which was distributed among different renewable energy power types including wind power biomass power and solar pv power or categories including electricity price accessing grid projects and public independent renewable energy power system on the other hand the renewable energy power subsidy also brings benefits to different aspects of the society specifically the environmental benefit amounted to 17 88 billion cny and the benefits of guaranteeing energy security advancing technology innovation and promoting economic development were also noteworthy

customs unions and the core abstract customs union formation is modeled as a two stage game in the first stage countries make coalitional choices according to core theory in the second stage optimal tariffs are determined this yields a theory that predicts which customs unions form an example shows that a customs union can be an equilibrium even when both member countries do better at free trade

new theories of trade among industrial countries most students of international trade have long had at least a sneaking suspicion that conventional models of comparative advantage do not give an adequate account of world trade this is especially true of trade in manufactured goods both at the macro level of aggregate trade flows and at the micro level of market structure and technology it is hard to reconcile what we see in manufactures trade with the assumptions of standard trade theory in particular much of the world s trade in manufactures is trade between industrial countries with similar relative factor endowments furthermore much of the trade between these countries involves two way exchanges of goods produced with similar factor proportions where is the source of comparative advantage furthermore most manufacturing industries are characterized by at least some degree of increasing returns especially if we include dynamic scale economies associated with rd the arguments of many observers that much trade among industrial countries is based on scale economies rather than comparative advantage and the common argument that a protected home market can promote exports until recently however none of these alternatives was presented in a form which economists would properly call a model that is a formal structure in which macro behavior is derived from micro motives this lack of formalization essentially barred alternatives to comparative advantage however plausible from the mainstream of international economics in the last five years or so however there has been a significant change a number of theorists have begun to apply methods drawn from the theory of industrial organization to international trade to produce a new genre of trade models these models offer a new way of looking at tradeand particularly at manufactures trade among the industrial countries a characteristic feature of the new models is that they often rely on very special assumptions this is probably inevitable given the inherent complexity of the world once the great simplifying device of constant returns is dropped only special assumptions will yield tractable analysis in spite of the specialness of individual models however the new literature on trade is starting to give rise to concepts which look more general than the particular models used to illustrate them the purpose of this paper is to sketch out two such concepts which i believe are important and more general in application than the particular models in which they have been expressed the first is the theory of intraindustry trade a view which incorporates scale economies as well as comparative advantage as major causes of trade and gains from trade the second is the less well developed theory of technological competition which may begin to shed some light on the dynamics of international competition in research intensive industries

free trade equilibria to multi country quota games abstract we consider a symmetric n country competitive general equilibrium endowment economy in which countries select quotas in a stsic nash game to maximize the welfare of representative citizens unlike tariffs quota revenues need not accrue solely to the quota setting country the only possible equilibrium outcome other than autarky is free trade free trade prevails unless the quota setting country receives a fraction of quota rents greater than n 1 n we conclude that the prevelance of binding quotas in contrast to tariffs cannot be explained within the accepted rubric in which countries maximize the welfare of representative citizens

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

deregulation vertical unbundling and the performance of china s large coal fired power plants article i nfo in 2003 china s integrated electricity utility the state power corporation spc was unbundled and dism antled into five generation groups and two grid companies in an effort to increase competition and improve ef ficiency in this paper we study the impact of this deregulation reform on the operational efficiency for a balanced panel of 34 large power plants for the period 1997 2010 we find that on average these power plants have converged to the technological frontier over the sample period controlling for substantial heterogeneity in the technical profile we also find that the unbundling reform has boosted productivity of china s large thermal power plants however the presumably differential impacts of the reform on the previously spc managed power plants and the independent power producers in our sample are insignificant

international trade and industrial organization this survey reviews recent contributions to the interface between international trade and industrial organization import competition places a substantial limit on domestic market power in the short run competitive conditions can influence the speed and efficiency of a domestic market s adjustment to international disturbances exports effects on competition among national sellers are unclear and depend on the scope for price discrimination models of trade with monopolistic competition explain intra industry trade and also the widely observed sensitivity of firm size to market size exposure to trade also increases the technical efficiency of production diverse policy issues turn on the distinction between national and global welfare and the scope for commitment

up the average cost curve inefficient entry and the new protectionism abstract a two country model is developed in which each country produces one good with increasing returns the goods being perfect or imperfect substitutes with cournot nash behavior and free entry certain restrictive trade policies have effects opposite to their favorable effect under noentry assumptions import tariffs and export subsidies lead to inefficient entry that raises rather than decreases the average production cost of and price charge by the domestic industry with negative welfare consequences we argue that these predictions of our model are closely consistent with extensive canadian data on entry exit and firms responses to trade liberalization

absolute and relative gains in international relations theory the problem of absolute and relative gains divides neoliberal institutionalism and structural realism the former assumes states focus primarily on their absolute gains and emphasizes the prospects for cooperation the latter supposes states are largely concerned with relative gains and emphasizes the prospects for conflict existing work in international relations theory generally traces the differences between these two theories to different assumptions about states preferences using a simple game theoretic model this essay offers a reformulation of the problem of absolute and relative gains that links changes in the states behavior the feasibility of cooperation and especially the states concern for relative versus absolute gains explicitly to changes in the constraints facing the states many of the differences between neoliberal institutionalism and structural realism appear as special cases of the model

recurrent trade agreements and the value of external enforcement abstract this paper presents a theory of dynamic trade agreements in which external institutions such as the wto play a central role in supporting credible enforcement in our model countries engage in ongoing negotiations and as a consequence cooperative agreements become unsustainable in the absence of external enforcement institutions by using mechanisms such as delays in dispute resolution and direct penalties enforcement institutions can restore incentives for cooperation despite the lack of coercive power the occurrence of costly trade disputes and the feasibility of mechanisms such as escape clauses depend on the degree to which enforcement institutions can verify and condition on events that may lead to trade disputes

optimal strategic trade policy under asymmetric information abstract when cost is private information in the brander spencer model the home government is confronted by a decision of choosing between two policy options a menu of policies and a uniform policy the former induces separation and so reveals the cost information to the foreign competitors the latter helps the weak firm by concealing the cost information the main result from this study is that policy menu is preferred to uniform policy under cournot competition while the opposite occurs under bertrand competition

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

disagreement points in trade negotiations abstract this paper analyzes trade negotiations between two large countries in the framework of an alternating offer bargaining model with endogenous interim disagreement actions despite of the flexibility in disagreement tariff selection the countries would keep the status quo tariffs in disagreement periods as far as the country which benefits from keeping the status quo tariffs compensates for the other country s foregone gains from deviating in disagreement actions each equilibrium outcome converges to a corresponding nash bargaining solution whose disagreement point reflects the status quo tariff rates as well as the threat of raising the tariff to the nash tariff rate

why is the doha development agenda failing and what can be done a computable general equilibrium game theoretical approach we use a world computable general equilibrium model to simulate 143 potential trade reforms and seek solutions to the issues hampering progress in the doha development agenda dda inside the domain defined by all these possible outcomes we apply the axiomatic theory of bargaining and select the nash solution of cooperative games the solutions vary according to the objective functions adopted by the trade negotiators when real income is the objective and services are excluded or when optimising terms of trade is the objective the nash solution is the status quo trade liberalisation is feasible only when the negotiators focus on national exports or gross domestic product gdp our assessment of some possible solutions reveals that excluding members having a gdp below a certain threshold improves the bargaining process regardless of the governments objective formation of coalition such as the g20 constitutes an option for its members to block outcomes imposed by rich members we also find that side payments may be a solution but represent a very high share of the global income gain

the narrow moving band the dutch disease and the competitive consequences of mrs thatcher notes on trade in the presence of dynamic scale economies abstract this paper presents a model of trade in which comparative advantage instead of being determined by underlying attributes of countries evolves over time through learning by doing in this model arbitrary patterns of specialization once established tend to become entrenched over time the model sheds light on three widely held views that do not make sense in more conventional models first is the view that temporary protection of selected sectors can permanently alter the pattern of comparative advantage in the protecting country s favor second is the view that seemingly favorable developments such as the discovery of exportable natural resources may lead to a permanent loss of other sectors and reduce welfare in the long run third is the possibility that a temporary overvaluation of a currency due to tight money can lead to a permanent loss of competitiveness in some sectors

dynamic tariffs with asymmetric information recent developments in dynamic game theory are applied to determine when two countries can sustain freer trade given that they determine trade policies non cooperatively countries know their own level of protection but not the other country s level of protection using import trigger strategies cooperation in the form of low tariffs can be supported although there are periodic reversionary high tariff episodes however if terms of trade trigger strategies are used cooperation does not occur

strategic interaction among nations negotiable and non negotiable trade barriers trade policy is modelled as a two stage game between governments governments choose a negotiable trade barrier in the first stage of the game which is co operative the level of this barrier is treated as a binding commitment in the second stage of the game where the non negotiable trade barrier is chosen non co operatively hence governments choose trade barriers during negotiations with a view to influencing the equilibrium of the non co operative game to follow this proves to be a convenient framework in which to analyse the idea that trade agreements contain loopholes which can be exploited by protectionist governments trade negotiations induce substitution toward less efficient instruments of protection but are nevertheless welfare improving as long as the negotiations are relevant i e the negotiable barrier is actually in use and the two instruments are not perfect substitutes

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

a conjectural variation approach to strategic tariff equilibria abstract this paper examines tariff equilibria in a static two country trade model under a general class of conjectures regarding foreign retaliation we assume that each country chooses its optimum tariff given some conjecture in this class and derive the associated conjectural tariff equilibrium which can be thought of as a nash equilibrium conditional on each country s conjecture about how the foreign country will retaliate our main contribution is to show that when marginal propensities to consume imports are sufficiently small increased expectation of retaliation results in lower equilibrium tariffs for both countries since countries in general probably do expect some retaliation it therefore appears that the traditional cournot nash analysis probably overstates the trade restrictiveness of tariff wars

reexamination of the international export quota game through the theory of social situations abstract it is well known in international trade that a unique nash equilibrium of a static quota game is no trade and the rodriguez tower alternating retaliation process yields the same outcome yet they fail to capture the notion of retaliation appropriately using the framework of the theory of social situation we construct a model of the quota retaliation as an individual contingent threats situation in a static non cooperative setting we show that every solution called a stable standard of behavior supports at least one pareto efficient combination of quotas and vice versa free trade can be rationalized by a solution journal of economic literature classification numbers c79 f13

us trade wars in the twenty first century with emerging countries make america and its partners lose again in a context of rising protectionist rhetoric this paper looks at the potential impact of trade wars initiated by a change in us trade policies we use a static multicountry multisector general equilibrium model to evaluate six modalities of three potential trade wars for a total of 18 scenarios between the usa and china between the usa and mexico and a combination of the two previous conflicts in each case we evaluate various forms of trade retaliation by the us partner s the same level of import duty as the one imposed by the usa an import duty that minimises welfare loss a duty that minimises terms of trade deterioration a duty that generates the same amount of collected revenue and finally a nash equilibrium we conclude that there is no scenario in which the us government augments its domestic welfare or gdp there may be sectoral gains in value added in the usa but they are small and to the detriment of other sectors while losses for china are relatively small potential losses for the mexican economy are significant there are also free riders of these trade wars finally the way in which trade retaliations are designed matters greatly

testing for efficiency catching up we used advances in data envelopment analysis dea techniques to examine efficiency scores and investigate the issue of convergence and divergence in a cross country analysis specifically we used bootstrapping techniques to examine a data set of 52 developed and developing countries we found that when using the standard dea model some of the results were not robust further we broke the sample into groups to examine club convergence we found that efficiency scores were significantly different between groups and that there was some evidence of convergence of efficiency scores within each group

u s trade policies in a changing world economy this collection of original essays focuses on issues of international trade and trade policy in a world that is undergoing structural adaptation and in the face of a serious increase in the us trade deficit they bring a new consolidation of analytical perspective to a wide variety of current trade policy issues in their overview chapter alan v deardorff and robert m stern discuss developments in trade and protectionism review the case for free trade and address the arguments in favor of trade intervention rudiger dornbusch and jeffrey frankel analyze the macroeconomic setting in which changes have been made in us tariffs and ntbs stephen p magee and leslie young develop a model of endogenous protection and use it to search for microeconomic and macroeconomic variables that may help to explain changes in tariff and nontariff protection in the us since 1900 paul krugman takes up the question of identifying strategic sectors and the extent to which international competition and national government policies may affect the returns to such sectors under conditions of imperfect competition or when externalities are present avinash dixit analyzes the responses that the us might make to other countries trade policies in terms of how these policies affect us real national income and national security he concludes that the us could use strategic advance responses to alter other countries trade policies in a mutually beneficial way richard n cooper evaluates trade policy as foreign policy by looking at changes through three periods of us history t n srinivasan scrutinizes the national defense argument for government intervention in foreign trade john h jackson in discussing alternative negotiation approaches for the conduct of us trade policies observes that the pursuit of multilateralism may be frustrating and that what may be needed instead is a minilateral approach to trade liberalization in conclusion w max corden offers a package of rules that he believes may be both desirable and possible for the international trading system to attain robert m stern is professor of economics at the university of michigan and director of the institute of public policy studies he is coauthor with allan v deardorff of the michigan model of world production and trade mit press 1985

trade negotiations in a nash bargaining model abstract this paper examines the impact on trade negotiation outcomes due to different feasible utility payoff sets when a country s tastes or endowment patterns are biased towards a single commodity or rely heavily on international exchange to improve utility the negotiated outcome in a two country nash shapley bargaining framework generally benefits its opponent

alternative methods for environmentally adjusted productivity analysis abstract advances in the productivity with which food is produced around the world have been made possible through the intensive use of industrial inputs that have important environmental impacts like standard measures of macroeconomic performance however commonly used measures of agricultural efficiency and productivity account only for marketed commodities and inputs but ignore the environmental effects of these production processes a more complete analysis of trends in the sector s productivity requires the use of models that incorporate these environmental effects to provide better measures of the contributions of the sector from the social point of view this paper compares the conceptual merits and empirical performance of alternative approaches that can be employed for this purpose input distance functions output distance functions nonparametric methods and index number approaches each of the methods has relative strengths and weaknesses the methods are empirically illustrated using data from the canadian pulp and paper industry

optimal tariffs in consistent conjectural variations equilibrium abstract this paper analyzes the determination of the optimal tariff under the assumption of consistent conjectural variations ccv a general characterization of the ccv equilibrium is given we show that i there are in general a multiplicity of each equilibria and ii under certain restrictions the cournot equilibrium which is based on the assumption of no retaliation can also be a ccv equilibrium by contrast free trade is never a ccv equilibrium finally the ccv equilibrium is solved explicitly in a simple example

country bashing tariffs do bilateral trade deficits matter abstract this paper investigates the impact of restricting bilateral trade imbalances in a three country three good model bilateral trade balances matter because in the nash equilibrium each country will impose tariffs on countries with whom they have bilateral deficits or promote trade with countries with whom they have bilateral surpluses all countries lose from a nash country bashing war each country loses from the unilateral elimination of its bilateral imbalances but a country can gain from a bilateral agreement with its deficit partner provided that country has a surplus with a country devoted to free trade

effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries electric power sector reforms in the electricity supply industry have had an impact on industrial and household prices in developing countries in latin america the former soviet union and eastern europe using original panel data for 83 countries during the period from 1985 to 2002 we examine how each policy instrument of the reform measures influenced electricity prices for countries in the above regions we found that variables such as entry of independent power producers ipp unbundling of generation and transmission establishment of a regulatory agency and the introduction of a wholesale spot market have had a variety of impacts on electricity prices some of which were not always consistent with expected results the research findings suggest that neither unbundling nor introduction of a wholesale pool market on their own necessarily reduces the electric power price in fact contrary to expectations there was a tendency for the price to rise however coexistent with an independent regulator unbundling may work to reduce electricity prices privatization and the introduction of foreign ipp and retail competition lower electricity prices in some regions but not all

bilateral trade negotiations and trade diversification abstract this paper employs the nash bargaining framework to bilateral trade negotiations since country specific goods are imperfect substitutes for each other the amount of imperfection dictates a country s overall diversification or trade options which in turn determine bargaining gains evidence for semi industrialized countries tends to support this hypothesis

the determinants of the cost efficiency of electric generating plants a stochastic frontier approach this article provides a detailed analysis of generation plant operating cost efficiency over the period 1988 1997 i estimate a stochastic frontier cost function together with a model of plant inefficiencies to measure the operating efficiencies of individual plants and identify factors that are associated with variations in plant efficiencies i find evidence that plant efficiencies are associated with capacity utilization of the plant the number of plants under utility management and ownership form i also find that regulatory restructuring activity in certain states is associated with improvements in plant operating performance the purpose of this article is to provide a detailed analysis of the operating cost efficiencies of electricity generating plants over the period 1988 1997 i estimate the operating efficiencies of fossil fueled steam generating plants and examine factors that influence plant operating performance i use the estimation procedure of battese and coelli 1995 to simultaneously estimate a stochastic frontier cost function and a function relating plant efficiency levels to plant specific factors and other explanatory variables a comprehensive data set allows me to investigate the influence of capacity utilization ownership form and utility experience on plant efficiency levels since significant regulatory change in the electricity industry had begun during this time period i also investigate the impact of state level regulatory change on plant operating efficiency a number of authors have analyzed the efficiencies of electricity generating plants relative to a best practice frontier including kopp and smith 1980 schmidt and lovell 1979 stevenson 1980 cote 1989 reifschneider and stevenson 1991 hammond 1992 pollitt 1995 and fire grosskopf and logan 1983 1985 these studies find considerable evidence of inefficiency in electricity generation during the 1960s and 1970s the present study provides more recent information regarding generating plant efficiencies during a period of significant regulatory and structural change studies investigating the determinants of power plant departures from the frontier have focused primarily on the effects of ownership mode pollitt 1995 provides a comprehensive review of these studies reifschneider and stevenson 1991 examine the impact on cost efficiency of a number of variables including the capacity utilization of the firm s generating facilities more recently knittel 2001 examines the impact of incentive regulation on plant efficiency levels steiner

optimum tariffs north south abstract this paper investigates optimum north south tariffs by taking into consideration the fact that tariffs serve mainly as trade policy in the north but serve as revenue policy as well as trade policy in the south a statically and endogenously determined conjectural variation is devised to approach the problem we show that among other things there are many possibilities for the north optimally to choose the zero tariff other than only in the case where the elasticity of the south s supply of export is infinite

the resistibility and shiftability of depletable externalities abstract in their recently revised book baumol and oates the theory of environmental policy 2nd ed cambridge univ press cambridge uk 1988 accept bird s argument on the optimal taxation policy when externalities are shiftable and depletable their conclusion is that the standard pigouvian tax which is placed upon the generator of a negative externality can be extended to tax the victims who shift the externality to others or extended to compensate recipients in order to achieve pareto optimality it is shown in this paper that their conclusion is not free from error because the possibility of resisting a shifted externality and conjectural variations by recipients is not recognized whether an externality is shiftable depends not only on the shifting activity of the original victim but also the resisting activity of his neighbors and their conjectures about each other s action as such the shifters should be taxed and the recipients should be compensated at the same rate per unit of externality shifted if the tax base is the output of the shifting and resisting activities on the other hand if the tax base is the input which produced the shifting of the externality then both the shifters and the recipients should be subject to a tax or subsidy per unit of input that they have engaged in whether it is a tax or a subsidy depends on the direction and magnitude of the conjectural variation the model and its policy implication can be generalized to cover the omnipresent and wasteful rent seeking activities

china s electricity market restructuring and technology mandates plant level evidence for changing operational efficiency abstract china s electricity sector has experienced substantial efficiency improvement during the last one and a half decades the recent literature has mostly attributed the efficiency improvement to the 2002 unbundling reform with little attention paid to the large scale retrofitting process introduced by technology mandates using a unique panel dataset for hundreds of power plants from 1997 to 2010 we are able to examine the contributions from technology mandates and market restructuring we confirm the significant contributions from the unbundling reform but more importantly technology mandates have contributed at least half of the observed efficiency improvement during this period the results have significant implications for efficiency and demand forecast in the future

a theory of trade concessions abstract we present a model of tariff disputes and concessions consisting of an infinitely repeated game under bilateral incomplete information given potential agreements to be reached through unilateral or reciprocal concessions we find that an agreement involving reciprocal concessions is reached immediately if the discount factor is large and or the volume of trade is small otherwise prior beliefs about country type matter when both countries hold pessimistic priors immediate reciprocal concessions still occur very different prior beliefs lead to an immediate unilateral concession of the pessimistic country whereas optimistic priors coupled with low discount factors may generate delayed agreements 1997 elsevier science b v all rights reserved

is free trade passe abstract if there were an economist s creed it would surely contain the affirmations i understand the principle of comparative advantage and i advocate free trade yet the case for free trade is currently more in doubt than at any time since the 1817 publication of ricardo s principles of political economy and this is due to changes that have recently taken place in the theory of international trade while new developments in international trade theory may not yet be familiar to the profession at large they have been substantial and radical in the last ten years the traditional constant returns perfect competition models of international trade have been supplemented and to some extent supplanted by a new breed of models that emphasizes increasing returns and imperfect competition these new models call into doubt the extent to which actual trade can be explained by comparative advantage they also open the possibility that government intervention in trade via import restrictions export subsidies

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

the negotiation of sustainable tariffs abstract the governments of two countries explicitly negotiate over a new pair of tariffs as soon as they reach agreement the countries put into effect the agreed upon pair of tariffs which must be self enforcing we investigate how the difference in the two governments patience affects the negotiation results provided that the common optimum tariff is the status quo tariff rate for each country we find that the country with the more patient government gains most from the negotiation if the time lag between a defection and punishment in the implementation phase is short the opposite is true if the response lag in the implementation phase is long

trade wars a comparative study of anglo hanse franco italian and hawley smoot conflicts three trade wars are examined using variable sum game theory the anglo hanse trade wars 1300 1700 are explained as an iterated prisoners dilemma that failed to evolve into cooperation due to transaction costs rent seeking and economic recession the late igthcentury tariff war between france and italy is a case of an asymmetric trade war that illustrates the danger to a weak country of provoking a trade war with a strong country with the result that the former is forced to make major concessions the hawley smoot conflicts of the 1930s are cited as an example of the cooperation inhibiting effect of publicness in trade negotiations

trade liberalization in oligopolistic industries the quota case abstract this paper analyzes the short and long run effects on domestic price and output of partially liberalizing quota restrictions in a general model of oligopolistic interactions it is shown that perverse outcomes are possible in a number of cases including that of rational conjectures a larger quota may result in an increase in domestic output in the short run and a higher price in the long run the relationship between oligopolistic conjectures and the number of firms in the industry is critical in determining the long run outcome