the impact of ict investment and energy price on industrial electricity demand dynamic growth model approach the authors investigate the effects of information and communications technology ict investment electricity price and oil price on the consumption of electricity in south korea s industries using a logistic growth model the concept electricity intensity is used to explain electricity consumption patterns an empirical analysis implies that ict investment in manufacturing industries that normally consume relatively large amounts of electricity promotes input factor substitution away from the labor intensive to the electricity intensive moreover results also suggest that ict investment in some specific manufacturing sectors is conducive to the reduction of electricity consumption whereas ict investment in the service sector and most manufacturing sectors increases electricity consumption it is concluded that electricity prices critically affect electricity consumption in half of south korea s industrial sectors but not in the other half a finding that differs somewhat from previous research results reasons are suggested to explain why the south korean case is so different policymakers may find this study useful as it answers the question of whether ict investment can ultimately reduce energy consumption and may aid in planning the capacity of south korea s national electric power

tariff effects on mnc decisions to engage in intra firm and arm s length trade using confidential firm level data from the bureau of economic analysis bea on activities of u s multinational corporations mncs and their canadian affiliates we study the dramatic growth of intra firm and arm s length u s canada trade over the 1984 95 period we find that decisions to engage in intra firm and arm s length trade are essentially unrelated to tariff and transport cost reductions over this sample period thus we find that the increase in trade occurred almost entirely on the intensive rather than the extensive margin this is consistent with case study evidence in keane and feinberg 2006 where mnc executives consistently indicate that the modest tariff reductions of the 1984 95 period were not sufficient to justify fixed costs of overhauling international supply chains our results have important implications for recent influential models of international trade that rely on sensitivity of intra firm trade to tariffs at the extensive margin to explain how small tariff declines could have led to the explosion of intra firm trade since the 1980s we also find that initial conditions i e 1983 tariffs are uncorrelated with whether firms engaged in intra firm or arm s length trade activity at the start of the sample period this result is surprising as it implies that firms industries with a greater propensity to engage in trade were not in general successful at lobbying for more favourable tariff treatment a l aide de donnees confidentielles au niveau de la firme du bureau of economic analysis bea a propos des activites des firmes plurinationales fpn americaines et de leurs succursales canadiennes on etudie la croissance dramatique du commerce usa canada tant intra firme qu a bout de bras pour la periode 1984 95 il appert que les decisions de s engager dans l un et l autre commerce sont fondamentalement non reliees aux reductions des couts de transport et des tarifs au cours de cette periode on decouvre que l accroissement du commerce s est produit presqu entierement a la marge intensive plutot qu a la marge extensive c est en ligne avec les resultats de l etude de cas de keane et feinberg 2006 ou les cadres des fpn ont systematiquement indique que les modestes reductions de tarifs entre 1984 et 1995 n etaient pas suffisantes pour justifier les couts fixes impliques par la modification de leurs chaines de production internationales ces resultats ont des implications importantes pour certains modeles influents de commerce international qui sont ancres dans une sensibilite du commerce intra firme aux tarifs a la marge extensive pour expliquer comment de faibles chutes de tarifs ont pu engendrer une explosion du commerce intra firme depuis les annees 80 on montre aussi que les conditions initiales e g les tarifs de 1983 ne sont pas co reliees avec le fait que la firme est engagee ou non dans l un ou l autre commerce en debut de periode le resultat est surprenant parce qu il implique que firmes et industries ayant une plus grande propension a commercer n ont pas eu de succes dans leur lobby pour obtenir un traitement tarifaire plus favorable

an energy efficient future a strategy for the uk abstract this article examines the national and international energy context within which a uk energy efficiency strategy would need to be formulated and also highlights the broader macroeconomic rationale for a more concerted approach it focuses particular attention upon the crucial role of the public sector including both the energy demand and supply sides and the need to review investment appraisal criteria in the energy sector

private v public antitrust enforcement a strategic analysis we compare private and public enforcement of the antitrust laws in a simple strategic model of antitrust violation and lawsuit the model highlights the tradeoff that private firms are initially more likely than the government to be informed about antitrust violations but are also more likely to use the antitrust laws strategically to the disadvantage of consumers assuming coupled private damages if the court is sufficiently accurate adding private enforcement to public enforcement always increases social welfare while if the court is less accurate it increases welfare only if the government is sufficiently inefficient in litigation pure private enforcement is never strictly optimal public enforcement can achieve the social optimum with a fee for public lawsuit that induces efficient information revelation private enforcement can also achieve the social optimum with private damages that are efficiently multiplied and decoupled

beyond trade the impact of preferential trade agreements on fdi inflows summary this paper investigates the effects of preferential trade agreements ptas on net fdi inflows of member countries using a comprehensive database of ptas in a panel setting pta membership is associated with a positive change in net fdi inflows and fdi gains increase with the market size of pta partners and their proximity to the host country the estimated relationship is driven by the developing countries in the sample and agreements signed in the late 1990s early 2000s a period when the majority of deep integration ptas have been advanced

fragmentation and multinational production abstract this paper examines the consequences of falling transport costs for intermediate goods and shows how this leads to the spatial fragmentation of production as firms divide their production between countries they become either vertical multinationals if upstream activities are labour intensive or horizontal multinationals if downstream activities are labour intensive in the former case the volume of world trade increases and in the latter it falls fragmentation need not narrow international factor price differences which depend on the factor intensity of the activities that relocate

the indirect effects of foreign direct investment on trade a network perspective the relationship between international trade and foreign direct investment fdi is one of the main features of globalisation in this paper we investigate the effects of fdi on trade from a network perspective since fdi takes not only direct but also indirect channels from origin to destination countries because of firms incentive to reduce tax burden to minimise coordination costs and to break barriers to market entry we use a unique data set of international corporate control as a measure of stock fdi to construct a corporate control network ccn where the nodes are the countries and the edges are the corporate control relationships network measures as the shortest path length and the communicability are then computed on the ccn to capture the indirect channel of fdi empirically we find that corporate control has a positive effect on trade both directly and indirectly the result is robust with different specifications and estimation strategies hence our paper provides strong empirical evidence of the indirect effects of fdi on trade moreover we identify a number of interplaying factors such as regional trade agreements and the region of asia we also find that the indirect effects are more pronounced for the manufacturing sector than for primary sectors such as oil extraction and agriculture

endogenous market structures in international trade natura facit saltum abstract almost all of the large literature on international trade with imperfect competition assumes exogenous market structures the purpose of this paper is to develop a simple model that generates alternative market structures as nash equilibria for different parameterizations of the basic model equilibrium market structure is a function of the underlying technology familiar configurations such as a duopoly competing in exports or a single multinational producing in both markets arise as special cases small tax policy changes can produce large welfare effects as the equilibrium market structure shifts implying discontinuous jumps in prices quantities and profits

international comovement of economic fluctuations a spatial analysis summary we consider the comovement of economic volatility across multiple countries using spatial models with data from 187 countries over the period of 1960 2007 we find a strong spatial comovement of economic volatility more interestingly the effect of geographical proximity on economic volatility comovement is strongest during the period of international shocks 1973 86 but almost disappears over the globalization era 1987 2007 by way of contrast the influence of trade relations in determining the comovement of economic volatility is significant over 1987 2007

how trade and investment agreements affect bilateral foreign direct investment results from a structural gravity model the paper develops a new stand alone structural gravity model for explaining bilateral fdi patterns we employ the model to analyse the impact of preferential trade agreements ptas bilateral investment treaties bits and other policies on bilateral foreign direct investment fdi we use the unctad global database on bilateral fdi stocks and flows to control for the heterogeneous nature of ptas we employ two different indicators of pta depth we find that on average signing a pta increases bilateral fdi stocks by around 30 nevertheless we also find that deeper or comprehensive ptas e g including provisions on investment public procurement and intellectual property rights provisions do not have a significantly different impact than signing regular ptas belonging to the eu single market on the other hand has a strong impact and increases bilateral fdi by around 135 and signing a bit has an effect that is comparable to signing a pta

japanese manufacturing facing post fukushima power crisis a dynamic computable general equilibrium analysis with foreign direct investment the great east japan earthquake and the subsequent tsunami that hit and severely damaged the fukushima daiichi nuclear power station resulted indirectly in the shutdown of most of the nuclear power plants in japan to compensate for the lost nuclear power supply more fossil fuels were used people became concerned that this could be disadvantageous for domestic manufacturing industries and accelerated their offshoring to asia especially china through foreign direct investment fdi we used a world trade computable general equilibrium cge model with endogenous fdi from japan to china to quantify the impact of the power crisis on the japanese manufacturing sectors we found that the power crisis as well as fdi would adversely affect several sectors that use power intensively but would benefit the transportation equipment teq electric equipment eeq and machinery sectors despite the common expectation that these sectors would undergo a so called hollowing out

how limiting deceptive practices harms consumers there are two competing sellers of an experience good one offers high quality one low the low quality seller can engage in deceptive advertising potentially fooling a buyer into thinking the product is better than it is although deceptive advertising might seem to harm the buyer we show that he could be better off when the low quality seller can engage in deceptive advertising than not we characterize the optimal deterrence rule that a regulatory agency seeking to punish deceptive practices should adopt we show that greater protection against deceptive practices does not necessarily improve the buyer welfare

global value chains and inward foreign direct investment in the 2000s in this paper we make use of recent data published by the world input output database to i provide evidence on trade in value added of the major organization for economic co operation and development oecd member countries and major emerging economies designated by oe country group namely by measuring the degree of participation in global value chains gvcs at the country and sectoral levels and ii estimate whether the gvc participation of oe countries has positively influenced foreign direct investment fdi inward stocks in the 2000s the pooled regression model estimated shows that the country s degree of gvc participation has contributed positively for bilateral fdi inward stocks after controlling for other possible fdi determinants

the impact of banking deregulation on inbound foreign direct investment transaction level evidence from the united states abstract we evaluate the effects of state level banking deregulation that resulted in improved access to cheaper local finance on foreign firms investing in the u s we provide direct micro level evidence from u s inbound foreign direct investment transactions showing that interstate banking but not intrastate branching deregulation increased the number of transactions reduced the average transaction value and boosted overall investment by foreign multinationals we also show that lower cost of local credit and greater local bank competition in each state following the interstate banking deregulation are potential mechanisms that stimulated fdi activity finally we demonstrate that after the adoption of the interstate banking deregulation both the number and the average value of transactions increased in industries that are more dependent on external finance relative to industries that are less dependent

energy consumption prices and economic growth in three ssa countries a comparative study in this paper we examine the causal relationship between energy consumption and economic growth in three sub saharan african countries namely south africa kenya and congo drc we incorporate prices as an intermittent variable in a bivariate setting between energy consumption and economic growth thereby creating a simple trivariate framework using the ardl bounds testing procedure we find that the causality between energy consumption and economic growth varies significantly across the countries under study the results show that for south africa and kenya there is a unidirectional causal flow from energy consumption to economic growth however for congo drc it is economic growth that drives energy consumption these findings have important policy implications insofar as energy conservation policies are concerned in the case of congo drc for example the implementation of energy conservation policies may not significantly affect economic growth because the country s economy is not entirely energy dependent however for south africa and kenya there is a need for more energy supply augmentations in order to cope with the long run energy demand in the short run however the two countries should explore more efficient and cost effective sources of energy in order to address the energy dependency problem

energy growth and evolution towards a naturalistic ontology of economics in recent years new approaches to the integration of economics and thermodynamics have been developed which build on the physics of open non equilibrium systems the so called maximum entropy production principle i review these contributions in the light of the implications for economic ontology i e the question what the fundamental constituents of real world economic phenomena are i argue in favor of the naturalization of economic ontology using the phenomenon of economic growth as my workhorse and i explore the implications for the cross disciplinary foundations of ecological economics the paper shows how economic growth can be conceived as a natural process that is driven by fundamental physical forces the argument proceeds in three steps after a short review of recent research on the linkage between energy and growth i establish the connection with bioeconomic theories about evolution that allow restating the role of lotka s maximum power principle mpp as a property of open non equilibrium flow systems with sufficient degrees of freedom of structural adaptation the mpp is then related to the recent literature on maximum entropy production mep especially as deployed in the earth sciences economic growth can be seen as resulting from evolutionary adaptations of flow gradients in economic systems that increase throughputs of exergy and generation of work and which thereby enhance the capacity of the earth system to maximize entropy production this framework offers fresh perspectives on a number of issues in research and policy which i discuss in the conclusion

high and declining prices signal product quality high and declining prices signal a high quality product high prices are the efficient means of signaling because the consequent loss of sales volume is most damaging for lower cost lower quality products as time passes and the number of informed consumers increases the signaling distortion lessens resulting in a declining price profile the prediction of high and declining prices is robust across a variety of dynamic models and is consistent with recent empirical findings copyright 1991 by american economic association

spatial econometric analysis of foreign direct investment determinants in russian regions using a spatial autoregressive model of cross sectional and panel data we study the determinants and dominant strategies of foreign direct investment fdi inflows into russia before and after the 1998 financial crisis the important determinants of fdi inflows into russian regions since the start of transition appear to be market size the presence of large cities and sea ports oil and gas availability proximity to european market and political and legislative risks since 1998 it appears the importance of big cities the sakhalin region oil and gas resources proximity to european markets and legislation and political risks has increased our results also reveal a shift from horizontal fdi strategy to vertical fdi strategy in the post crisis period using a multiple spatial lags approach we show that neighbouring port endowed regions tend to have emerged in the post crisis era as competitors for fdi

economic growth and emissions reconsidering the empirical basis of environmental kuznets curves abstract recent empirical research indicates that certain types of emissions follow an inverted u or environmental kuznets curve ekc as income grows this regularity has been interpreted as a possible de linking of economic growth and patterns of certain pollutants for developed economies in this paper the empirical basis of this result is investigated by considering some statistical particularities of the various ekc studies performed it is argued that the inverted u relationship between income and emissions estimated from panel data need not hold for specific individual countries over time based on insights from intensity of use analysis in resource economics an alternative growth model is specified and estimated for three types of emissions co2 nox and so2 in four countries netherlands uk usa and western germany it is found that the time patterns of these emissions correlate positively with economic growth and that emission reductions may have been achieved as a result of structural and technological changes in the economy sustainable growth is defined as the rate of economic growth that does not lead to growth in emissions its rate is calculated for each type of emission and country based on estimated parameter values the resulting indicators reflect a balance between the positive influence of growth and negative influence of structural change and technological progress on emission levels

developments in the throughput income relationship theoretical and empirical observations abstract it has been suggested that the relationship between income and the associated environmental pressure in terms of derived materials inputs and pollution levels may take an inverted u shape indicating a delinking of environmental pressure from economic growth in relation to rising per capita incomes the likelihood of such a relationship being persistent is discussed in the context of a simple macro model of industrial metabolism and the possibility of relinking clearly emerges data on specific indicators of environmental pressure i e the throughput of materials energy and the volume of transport in 19 countries have been used to investigate patterns of delinking the results suggest that delinking may not be persistent already some advanced economies may be entering a new period of relinking the relationships between environmental pressure and welfare in the medium long term may be n shaped rather than inverted u shaped

information communication technology and electricity consumption in emerging economies abstract this study examines the impact of information communication technology ict on electricity consumption in emerging economies the empirical results obtained from dynamic panel demand models show a positive and statistically significant relationship between ict and electricity consumption when ict is measured using internet connections mobile phones or the number of pcs long run ict elasticities are smaller than income elasticities but because ict growth rates are so much higher than income growth rates the impact of ict on electricity demand is greater than the impact of income on electricity demand one implication of these results is that policies designed to close the digital divide between developed and developing economics by increasing the adoption of ict in developing countries are put at odds with energy policies to reduce ghg emissions

export platform foreign direct investment theory and evidence this paper proposes a model that accounts for export platform fdi a form of fdi that is common in the data but rarely discussed in the theoretical literature unlike the previous literature this paper s theory nests all the typical modes of supply including exports horizontal and vertical fdi horizontal and vertical export platform fdi the theory yields the testable hypothesis that a decrease in either inter regional or intra regional trade costs induces firms to choose export platform fdi the empirical analysis provides descriptive statistics that point to large proportions of third country exports of us fdi and an econometric analysis whose results are in line with the model s predictions the paper suggests policy implications for nations seeking to attract fdi

the complex integration strategies of multinationals and cross country dependencies in the structure of foreign direct investment abstract the behavior of many multinational enterprises is not well described by existing models of foreign direct investment fdi firms often follow strategies that involve vertical integration in some countries and horizontal integration in others a strategy known as complex integration this paper presents a three country model that is used to analyze why firms might follow a strategy of complex integration my analysis reveals that complex integration strategies create complementarities between potential host countries that have important implications for the structure of fdi the analysis also shows that falling transport cost between countries may increase the importance of complex integration strategies

how far away is an intangible services fdi and distance foreign direct investment fdi in services has grown significantly in recent years evidence of spatial relationships in fdi decisions have been provided for goods manufacturing by utilising physical distance based measures of trade costs this paper investigates spatial interactions for services fdi using several distance measures including physical distance genetic distance and transport time across different measures of distance the traditional determinants of outbound fdi activity remain valid for services we also find spatial interdependence for services fdi that is generally supportive of export platform fdi

on the welfare effects of trade and investment liberalization abstract using a three factor knowledge and physical capital model of trade and multinational activity we consider a set of policy experiments to assess the welfare effects of trade and investment liberalization in general equilibrium specifically we address the question of whether and under which circumstances a single versus a combined trade investment liberalization strategy or a unilateral versus a bilateral policy change is preferable from a single country s and the world s point of view the focus of this paper is to look at three relevant questions first when is investment liberalization beneficial and when is it harmful for a single economy or the whole world second is pure investment liberalization a welfare maximizing strategy third when is either kind of liberalization trade investment or both welfare improving and when neither of them

an empirical investigation of the pollution haven effect with strategic environment and trade policy abstract using a new dataset on the stringency and enforcement of environmental policy this study is the first to find robust confirmation of a pollution haven effect in a cross country context by accounting for strategically determined environment trade and intellectual property right ipr policies a simple game theoretic approach to policy determination is described which suggests an identification strategy based on other country characteristics it is found that for the top 20th percentile of countries in terms of growth in u s multinational affiliate value added as much as 8 6 of that growth between 1999 and 2003 can be attributed to declining relative stringency and enforcement of environmental policy the results are robust to a number of identification tests weak iv tests and third country spatial effects further evidence is found that relatively footloose industries are more likely to be affected by environmental policy than more traditionally dirty industries and enforcement of environmental policies tends to be a more important deterrent than the stringency of the policy set

substitution of information for energy conceptual background realities and limits abstract the substitution of information for energy is a dominant phenomenon in economic activities but this substitution is very particular compared to the substitution among factors of production because information does not have the properties of a factor of production this article attempts to understand how information substitutes for energy

a race to the bottom employment protection and foreign direct investment a common critique of globalization is that it leads to a race to the bottom specifically it is assumed that multinationals invest in countries with lower regulatory standards and that countries competitively undercut each other s standards in order to attract foreign capital this paper tests this hypothesis and finds robust empirical support for both predictions first a reduction in employment protection rules leads to an increase in foreign direct investment fdi furthermore changes in employment protection legislation have a larger impact on the relatively mobile types of fdi second there is evidence that countries are competitively undercutting each other s labor market standards

knowledge capital international trade and foreign direct investment a sectoral analysis the knowledge capital kc model of mnes is now a widely adopted empirical approach to explaining the location and production decisions of global firms based on both horizontal and vertical motivations while most of the existing studies have focused on highly aggregated national data we extend this model to sectoral data consisting of broad manufacturing industries and explicitly account for the dynamic nature of international investment data the empirical results from a dynamic panel data analysis indicate that that the predictions of the kc model regarding mne behavior vary by the type of industry production processes in electronics and transportation equipment are more characterized by efficient vertical specialization of r d activities and assembly while other sectors display more complex motivations

empirical relationships between the energy and information segments of the us economy an input output approach abstract maxwell s demon in 1871 introduced in science the possibility of using information to generate free energy since that time researchers have been speculating about the implications of information for energy use recent studies indicate the substitutability between energy and information in the so called information economies these studies suggest that information in general and information technologies in particular have the potential to save energy in this paper an input output approach is employed to search for empirical evidence of substitutability between energy and information at a national economic level the development of information activities in the united states economy is studied from 1963 to 1987 and the contribution of information to save energy is indicated results show an increasing presence of information activities in all segments of the economy and strong evidence of their contribution to energy savings

information costs agglomeration economies and the location of foreign direct investment in china1 he c 2002 information costs agglomeration economies and the location of foreign direct investment in china reg studies 36 1029 1036 foreign investors suffer from adverse information asymmetry and face internal and external uncertainties in host economies better access to information and a variety of agglomeration economies could attenuate the disadvantages that foreign investors encounter statistical results strongly buttress the argument that foreign investors are inclined to favour such locations that could minimize information costs and offer a variety of agglomeration economies theoretical and policy implications and further research directions are discussed at the end 1 this paper was presented at the 63rd annual meeting of the association of pacific coast geographers sept 13 16 2000 arcata ca

who benefits from misleading advertising considering a model of price and misleading advertising competition between two brands producing horizontally and vertically differentiated brands we investigate allocative implications of misinformation and related regulatory policies although misinformation distorts consumers decision making misinformation can correct inefficiencies resulting from misallocation of goods thereby increasing welfare however advertising competition may create a prisoner s dilemma for firms and reduce welfare but smart consumers unaffected by misinformation and consumers preferring low quality brands may gain we also demonstrate how a biased policymaker who places different weights on producers and consumers surpluses behaves in response to misinformation disseminated by firms

does final market demand elasticity influence the location of export processing evidence from multinational decisions in china given the importance many developing countries attach to attracting foreign investors engaged in export processing activities surprisingly little is known about the sensitivity of these investors to local wage differences and the role played by final product market conditions using data on 2 884 foreign invested manufacturing projects in china we estimate the importance of host province wages to firm s location choice and investigate how this sensitivity varies with demand conditions facing the industry in china s largest export market the united states we use the profit function to show theoretically that firms ability to pass wage costs through to final markets matters for location choice and we test the implications of the theory using a control function technique for conditional logit developed by petrin and train as predicted we find that investors facing more elastic demand in the us market are more sensitive to wages across export processing locations taking both the factor intensity of the activity and final market demand elasticity into account we find that investors producing homogenous goods such as metals chemicals and food processing are more likely to be attracted by relatively low wages than those producing differentiated goods we also find that while oecd investors are more responsive to wage differences than are investors from hong kong taiwan and macau they are less likely to choose a location that has received a large share of prior foreign investment

misleading advertising in duopoly this paper builds a model of strategic misleading advertising in duopolistic markets with horizontal product differentiation and advertising externality between firms we investigate the effects of regulating misinformation on market competition behaviour of firms and social welfare we show that the degree of advertising externality and the magnitude of advertising costs are crucial for determining the welfare effects of several regulations including prohibiting misleading advertising educating consumers taxing production and taxing misleading advertising we extend the model by introducing heterogeneous consumers heterogeneous production costs between firms and the degree of advertising informativeness our results have important policy implications for the debate regarding regulation of advertising especially direct to consumer advertising for prescription and over the counter drugs ce texte construit un modele de publicite mensongere strategique dans des marches duopolistiques ou il y a differentiation horizontale des produits et externalites de publicite entre firmes on examine les effets d une reglementation de la desinformation sur la concurrence dans le marche sur le comportement des firmes et sur le bien etre social on montre que le degre d externalites de la publicite et la magnitude des couts de publicite sont des elements cruciaux pour determiner les effets de bien etre de plusieurs reglementations y compris prohiber la publicite mensongere eduquer les consommateurs taxer la production et taxer la publicite mensongere on developpe le modele pour prendre en compte les consommateurs heterogenes des couts de production heterogenes entre firmes et le contenu informationnel de la publicite ces resultats ont des implications importantes pour la politique publique dans les debats concernant la reglementation de la publicite en particulier la publicite directe au consommateur pour les medicaments avec et sans ordonnance

export oriented fdi in the uk it is well known that the performance of foreign firms compared to domestic companies is superior with respect to employment wages and productivity in this paper we detail the export behaviour of foreign affiliates in the united kingdom relative to indigenous firms our findings show that foreign firms are more likely to export and when they do so they are more export intensive and overall contribute disproportionately to total manufacturing exports from the uk while firm level advantages explain some of these differences in export behaviour strategic considerations dominate where these include the differential in costs productivity and market size between the uk and foreign countries that is both horizontal and vertical motives can be found for the use of the uk as an export platform by foreign firms copyright 2004 oxford university press

multinationals multi plant economies and the gains from trade a general equilibrium model of a multinational enterprise based on economies of multi plant operation is developed these economies are modelled as arising from the existence of a joint input whose productivity in each production facility is independent of the number of facilities maintained by a firm the multinational thus offers the world increased technical efficiency by eliminating the duplication of the joint input that would occur with independent national firms since this technical efficiency may come at the expense of increased market power the full determinants of home country host country and world welfare are considered

on the measurement of investment types heterogeneity in corporate tax elasticities this paper contributes to debates about the appropriate characterisation of heterogeneous investment types and to what extent different investment motives affect the responsiveness to corporate taxation in particular we employ and refine a methodology to better evaluate the tax elasticity of investment types using a combination of both firm specific information and sector specific information from input output tables we discuss how to classify investment as non related horizontal vertical and complex types first we point out to what extent the resulting classification depends on assumptions made by the researcher second we employ an ample set of classifications and find that non related investment reacts stronger to corporate taxation whereas horizontal investment is less responsive though significant negative tax semi elasticities turn out for the subset of manufacturing industries to address inherent characteristics of vertical and complex investment we extend the methodology and find that by and large stronger business motives reduce the tax responsiveness of investment to a larger extent given the current debates about substantial corporate tax reforms it is all the more important to recognise that corporate tax effects can vary fundamentally between countries driven by country specific differences in their composition of industries and investment types

foreign direct investment in china reward or remedy this paper tests the significance of fdi as a way to alleviate credit constraints incoming foreign investment provides additional sources of capital specifically in the chinese case enterprises may look for foreign investors being constrained in their activity due to distortions in the state dominated system first the chinese financial system allocates resources to the least efficient firms state owned enterprises while denying the same resources to chinese private enterprises forcing them to look for a foreign investor second the inefficient system of state investment planning leads to mismanagement of public enterprises increasing insolvency induced fdi we propose to analyse determinants of fdi in chinese provinces to test the above hypotheses we control for traditional determinants of fdi such as market access labour costs productivity infrastructure reform advances and banking sector size in order to assess the impact of inter provincial heterogeneity in terms of the access that private enterprises have to credit and the distortive management in state owned firms

shrouded attributes consumer myopia and information suppression in competitive markets bayesian consumers infer that hidden add on prices e g the cost of ink for a printer are likely to be high prices if consumers are bayesian firms will not shroud information in equilibrium however shrouding may occur in an economy with some myopic or unaware consumers such shrouding creates an inefficiency which firms may have an incentive to eliminate by educating their competitors customers however if add ons have close substitutes a curse of debiasing arises and firms will not be able to profitably debias consumers by unshrouding add ons in equilibrium two kinds of exploitation coexist optimizing firms exploit myopic consumers through marketing schemes that shroud high priced add ons in turn sophisticated consumers exploit these marketing schemes it is not possible to profitably drive away the business of sophisticates it is also not possible to profitably lure either myopes or sophisticates to nonexploitative firms we show that informational shrouding flourishes even in highly competitive markets even in markets with costless advertising and even when the shrouding generates allocational inefficiencies

fdi by firms from newly industrialised economies in emerging markets corporate governance entry mode and location previous studies emphasise that the foreign direct investment fdi strategies of firms from newly industrialised economies nies are different from the fdi strategies of firms from developed economies it has also been shown that nie firms are often controlled by founding families who make key strategic decisions and that they rely heavily on network linkages when developing their fdi strategies what is less clear however is how the corporate governance factors in nies the risk preferences of the main shareholder constituencies and the network based business culture affect the decision to undertake fdi in emerging markets this paper explores the entry mode and location choices of firms from an asian nie taiwan in an emerging market the people s republic of china it shows that the choice of equity stake in an affiliate depends upon the extent of family and institutional share ownerships in the parent company high commitment entry is found to be positively associated with the affiliate being located in areas with strong economic cultural and historic links with the parent company furthermore the entry mode and location decisions appear to be interrelated with the parent s equity stake in the affiliate depending inter alia upon the location within china and the favoured location depending inter alia upon the equity stake

reasonable doubt and the optimal magnitude of fines should the penalty fit the crime models of the enforcement compliance relationship have assumed that both the probability and magnitude of fines are independent choice variables of policy makers these models indicate that it may be optimal to monitor with lowfrequency but to inflict uniformly maximal penalties for all infractions detected this article shows that if the judicial system is built on the reasonable doubt test then the penalty and the probability of conviction are not independent in particular as the penalty increases the probability of conviction falls as a result uniformly maximal penalties may actually encourage crime rather than deter it this article shows that optimal fines should rise with the severity of the infraction that is the penalty should fit the crime models of the enforcement compliance relationship generally treat both the probability and magnitude of fines as independent choice variables of the government this approach has led becker 1968 and others to conclude that it is optimal to set uniformly maximal penalties for all crimes and to set the probability of conviction at the minimum level necessary to enforce compliance with the law while this normative prescription is natural and intuitive there still remains a larger positive question of why in most nations of the world penalties are not uniformly high but rather rise with the severity of the crime one possible resolution of the positive and normative questions may lie in the fact that penalties and probabilities of conviction are not generally independent convictions are typically determined by judges or jurors who are instructed to convict only if the evidence convinces them beyond a reasonable doubt that the accused is guilty psychologists however have found that a juror s willingness to convict may be influenced by more than just the evidence jurors are very sensitive to the potential penalties that defendants may pay

foreign direct investment in china recent trends and current policy issues by john henley colin kirkpatrick georgina wilde john henley is professor of international management at the department of business studies university of edinburgh colin kirkpatrick is professor of development economics at the institute for development policy and management university of manchester georgina wilde was previously regional director asia pacific with the economist intelligence unit london and is now an independent consultant the paper has been developed from presentations made at a seminar on investment and development in central and western china wuhan hubei province pr china november 1997 and was also presented at the development studies association trade and industry study group meeting march 1998 the comments of participants at both meetings and of two anonymous referees are gratefully acknowledged

exposing false advertising countries rely on different public and private agents to enforce consumer protection and fair competition regulations to analyze the repercussions of different regimes on social welfare we consider the possibility of false advertising by a firm in an environment with duopolistic competition and with consumers who can be rational or naive regarding the trustworthiness of advertising claims we compare the incentives for and outcomes of false advertisement verification and injunction requests made by one of three parties a government agency with a broad focus maximizing ex post total welfare and two narrowly focused parties the first a public or private party focused on consumer welfare net of its own enforcement costs and the second a competitor interested exclusively in its own profits considering ex ante welfare we find that having a narrowly focused party as the plaintiff can be optimal due to government agency commitment problems the optimal regime depends on both the share of the population s naive consumers and the level of enforcement costs resume denonciation de la publicite mensongere pour veiller a l application des reglementations en matieres de protection des consommateurs et de concurrence loyale les etats s appuient sur differents regimes de controle representes par des agents publics et prives afin d analyser les repercussions de ces differents regimes sur le bien etre nous evaluons la possibilite qu une entreprise puisse diffuser de la publicite mensongere dans un environnement concurrentiel duopolistique avec des consommateurs potentiellement rationnels ou naifs relativement a la veracite des allegations publicitaires nous comparons les mesures incitatives pour controler la publicite mensongere et leurs resultats ainsi que les mises en demeure initiees par l une de ces trois parties une agence gouvernementale a visee large aux fins de maximisation totale du bien etre ex post et deux autres parties a visee plus ciblee l une publique ou privee tournee vers le bien etre des consommateurs deduction faite de ses propres co ts de mise en uvre et l autre representee par un concurrent s interessant exclusivement a ses propres profits en tenant compte du bien etre ex ante et en raison des problemes d engagement des agences gouvernementales nous constatons qu une procedure peut s averer optimale des lors que le demandeur represente une partie a visee plus ciblee le regime optimal depend a la fois de la proportion de consommateurs naifs et du niveau des couts de mise en uvre

energy consumption economic growth and prices a reassessment using panel vecm for developed and developing countries this paper reinvestigates the energy consumption gdp growth nexus in a panel error correction model using data on 20 net energy importers and exporters from 1971 to 2002 among the energy exporters there was bidirectional causality between economic growth and energy consumption in the developed countries in both the short and long run while in the developing countries energy consumption stimulates growth only in the short run the former result is also found for energy importers and the latter result exists only for the developed countries within this category in addition compared to the developing countries the developed countries elasticity response in terms of economic growth from an increase in energy consumption is larger although its income elasticity is lower and less than unitary lastly the implications for energy policy calling for a more holistic approach are discussed c 2006 elsevier ltd all rights reserved

information technology and the use of energy abstract this paper assesses the potential impact of information technology on energy use in advanced economies irrespective of energy price movements information technology is expected to raise the energy efficiency of economic activity through its direct application to reducing energy consumption in products and processes and through the productivity improvements and structural changes it initiates which will not involve substantial increases in energy use economic growth will thus be less tied dynamically to the expansion of energy supply and demand than in previous phases of industrialization while overall energy demand may not rise strongly information technology will however tend to increase electricity s importance in the economy

digitalization and energy consumption does ict reduce energy demand abstract this article investigates the effect of digitalization on energy consumption using an analytical model we investigate four effects 1 direct effects from the production usage and disposal of information and communication technologies ict 2 energy efficiency increases from digitalization 3 economic growth from increases in labor and energy productivities and 4 sectoral change tertiarization from the rise of ict services the analysis combines empirical and theoretical findings from debates on decoupling energy consumption from economic growth and from debates on green it and ict for sustainability our main results effects 1 and 3 tend to increase energy consumption effects 2 and 4 tend to decrease it furthermore our analysis suggests that the two increasing effects prevail so that overall digitalization increases energy consumption these results can be explained by four insights from ecological economics a physical capital and energy are complements in the ict sector b increases in energy efficiency lead to rebound effects c ict cannot solve the difficulty of decoupling economic growth from exergy d ict services are relatively energy intensive and come on top of former production in future digitalization can only boost sustainability when it fosters effects 2 and 4 without promoting effects 1 and 3

inferior products and profitable deception we analyse conditions facilitating profitable deception in a simple model of a competitive retail market firms selling homogenous products set anticipated prices that consumers understand and additional prices that naive consumers ignore unless revealed to them by a firm where we assume that there is a binding floor on the anticipated prices our main results establish that bad products those with lower social surplus than an alternative tend to be more reliably profitable than good products specifically 1 in a market with a single socially valuable product and sufficiently many firms a deceptive equilibrium in which firms hide additional prices does not exist and firms make zero profits but perversely 2 if the product is socially wasteful then a profitable deceptive equilibrium always exists furthermore 3 in a market with multiple products since a superior product both diverts sophisticated consumers and renders an inferior product socially wasteful in comparison it guarantees that firms can profitably sell the inferior product by deceiving consumers we apply our framework to the mutual fund and credit card markets arguing that it explains a number of empirical findings regarding these industries

rather bait than switch abstract this paper reviews some of the theory e g postner 1973 on the incentives of firms to advertise deceptively it argues that the widely held belief that these incentives are small and are outweighed by important disincentives is based on unjustified assumptions about consumer rationality the paper presents a model of advertising and consumer reactions in which consumers manifest a form of bounded rationality given this it is demonstrated that under cogent assumptions about parameter values some firms will have an incentive to advertise deceptively causing a net welfare loss to society in the absence of corrective policy

the impact of it investment on energy japan and us comparison in 2010 abstract we developed an economic model and an energy model and used them to analyze the effects of information technology it investment on energy consumption and co 2 emissions in the us and japan the analysis involved mainly calculations for two cases business as usual and stimulated it investment we also tested the oft posited possibility that advancing it investment in the us is already lowering that country s energy intensity energy gdp our analyses determined that 1 increasing it lowers energy co 2 intensity and 2 an increase or decrease in overall energy consumption depends on which trend is stronger the income effect caused by economic vitalization from increased it use increasing energy consumption or the substitution effect by change in the industrial structure as seen in the shift away from smokestack industries decreasing energy consumption according to our calculations japan would conserve more energy by promoting it than not on the other hand because the substitution effect is already advanced in the us further increasing it use in the future will have a large income effect and increase energy use

how does foreign direct investment affect pollution toward a better understanding of the direct and conditional effects this paper seeks to investigate the impact of foreign direct investments fdis on industrial pollution hbox co 2 hbox so 2 hbox no mathrm x and bod emissions on a large sample of highly heterogeneous countries by using panel data on manufacturing fdis from france germany sweden and the united kingdom between 1995 and 2008 and by developing an empirical model with first and second order interaction terms we investigate the existence and the conditionality of the most controversial fdi induced effects on industrial emissions i e pollution haven factor endowments and pollution halo hypotheses the paper has three main findings 1 the central hypotheses linking pollution to fdi are found to act simultaneously with opposing effects 2 fdis are associated with pollution reduction i e predominating pollution halo induced effect in countries with low to average capital to labour ratio but not too lax environmental regulation 3 fdis are found to increase pollution i e prevailing pollution haven and or factor endowments induced effects in countries with average capital endowments and lax environmental regulations as well as in all the capital abundant countries though with a smaller magnitude in countries having strict environmental regulations and or a high skilled labour force some specific and interesting findings are discussed regarding different fdi origin countries and fdi host country groups

the location decisions of foreign investors in china untangling the effect of wages using a control function approach there is almost no support for the proposition that capital is attracted to low wages from firm level studies we examine the location choices of 2 884 firms investing in china between 1993 and 1996 to offer two main contributions first we find that the location of labor intensive activities is highly elastic to provincial wage differences generally investors wage sensitivity declines as the skill intensity of the industry increases second we find that unobserved location specific attributes exert a downward bias on estimated wage sensitivity using a control function approach we estimate a downward bias of 50 to 90 in wage coefficients estimated with standard techniques i introduction

bilateral versus multilateral trade and investment liberalisation to assess the welfare effects of bilateral versus multilateral trade and or investment liberalisation in general equilibrium we set up a three country and three factor knowledge capital model of trade and multinational activity numerical simulation results indicate that multilateral liberalisation tends to dominate bilateral liberalisation in welfare terms a transition economy tends to prefer bilateral over multilateral liberalisation to avoid plant relocation for similar reasons a developed country may prefer bilateral over multilateral liberalisation if the other economies exhibit big relative factor endowment differences

spatial interdependence in us outward fdi into africa latin america and the caribbean the existing literature on spatial interdependence in fdi flows has primarily focused on developed economies as hosts with these hosts economically tied together via good infrastructure and historically strong significant trade flows in contrast we explicitly test for the presence of spatial interdependence in developing hosts africa latin american and the caribbean where such ties are not as strong for us outbound fdi between 1995 and 2007 our empirical results confirm third country effects do matter even when controlling for spatial and time period fixed effects based on the signs of the market potential and spatial lag coefficients we find us fdi strategies into these regions as consistent with complex vertical specialisation

information and communication technologies a new round of household electrification abstract information and communication technologies icts increasingly permeate everyday life in industrialized societies the aim of this paper is to explore ict related transformations of everyday practices and discuss the implications particularly for residential electricity consumption the present socio technical changes are seen in a historical perspective and it is argued that the integration of ict into everyday practices can be seen as a new round of household electrification comparable to earlier rounds that also led to higher electricity consumption a case study carried out in denmark in 2007 2008 explores the present changes in everyday life based on qualitative interviews the study focuses on people s ways of integrating icts into their everyday practices on any significant changes in these practices and on the influence of the changed practices on electricity consumption the paper concludes with a discussion on the implications for energy policy

it substitution for energy leads to a resilient structure for a survival strategy of japan s electric power industry abstract the dramatic surge in information technology it around the world and an evolving global economy are subjecting firms to megacompetition this is the case particularly in japan s electric power industry where the power rate is one of the highest in the world hence it is noted that japan s industry has lost its price competitiveness in the world market resulting in stagnation of production hence leading to stagnation in power demand in addition an increase in trends of customer s preferences and the variety of participants in the power supply race have put electric power companies at the mercy of customers with alternative supply sources given that uncertainty with respect to energy security as well as power generation and distribution systems safety increases as strongly cautioned by the recent blackout in the us and canada a dramatic conversion of existing strategies would be indispensable for electric power companies a conversion from a high demand elasticity dependent supply structure to a resilient structure is required while the former aims at constructing a high demand elasticity supply structure based on the myth of high growth of demand the latter aims at maintaining profit while minimizing the elasticities of factors with high uncertainty such as energy resources and costly capital investment linked to a fluctuating power demand this paper demonstrates the significance of it substitution for energy through consortia structure thereby utilizing it spillover and leading to resilience and leveraging consortia structure as japan s electric power industry survival strategy an empirical analysis using japan s nine leading electric power companies over the last quarter century has been conducted

the social value of information on product quality in the context of a seller with private information about product quality i show that revelation of information on product quality is sometimes but not always socially valuable when it is socially valuable there is generally a tradeoff between the acquisition and revelation of finer but more costly information and the revelation of coarser but less costly information as a result it can be socially optimal for firms to reveal only coarse private information

finite optimal penalties for false advertising i consider a setting in which firms have unverifiable private information about their type which corresponds to their probable product quality firms can expend a learning cost in order to observe their quality and the regulator can enforce false advertising penalties contingent only on verifiable realized quality i show that it may be socially optimal for high type firms to signal their type through speculative claims rather than to learn and signal their quality this implies that socially optimal false advertising penalties are finite in contrast to the literature s common assumption of arbitrarily high false advertising penalties and that the regulator optimally tolerates the existence of some false claims in equilibrium

fdi in space spatial autoregressive relationships in foreign direct investment abstract there are a number of theoretical reasons why foreign direct investment fdi into a host country may depend on the fdi in proximate countries such spatial interdependence has been largely ignored by the empirical fdi literature with only a couple recent papers accounting for such issues in their estimation this paper conducts a general examination of spatial interactions in empirical fdi models using data on us outbound fdi activity we find that estimated relationships of traditional determinants of fdi are surprisingly robust to inclusion of terms to capture spatial interdependence even though such interdependence is estimated to be significant however we find that both the traditional determinants of fdi and the estimated spatial interdependence are quite sensitive to the sample of countries one examines

foreign direct investment in china a spatial econometric study foreign direct investment fdi began to flow into china with advent of reforms in 1978 following a period of relatively slow growth fdi inflows to china picked up after 1990 as china surpassed every other nation but the united states in attracting foreign investment in particular coastal regions of china have received the bulk of fdi inflows to the country in this paper we use province level data to explain the pattern of fdi location across china we build upon previous research introducing new potential determinants using more recent fdi data and incorporating spatial econometric techniques in doing so we test for potential econometric problems arising from the spatial pattern of the data and correct for them by running more appropriate models we find that economic size labor productivity and coastal location attract fdi while higher wages and illiteracy rates deter it the transportation infrastructure variables we try are not found to have statistically significant relationships with the level of fdi inflows across provinces this abstract was borrowed from another version of this item

the location choices of foreign investors a district level analysis in india this paper analyzes the determinants of the location choices made by foreign investors at the district level in india to gauge the relative importance of economic geography factors local business conditions and the presence of previous foreign investors we employ a discretechoice model and poisson regressions to control for the potential violation of the assumption of independence of irrelevant alternatives our sample includes about 19 500 foreign investment projects approved in 447 districts from 1991 2005 we find that foreign investors strongly prefer locations where other foreign investors are they are also attracted to industrially diverse locations and those with better infrastructure we conclude that the concentration of fdi in a few locations could fuel regional divergence in post reform india

diversification cost structure and the risk premium of multinational corporations we investigate theoretically and empirically the relationship between the geographic structure of a multinational corporation and its risk premium our structural model suggests two channels on the one hand multinational activity offers diversification benefits risk premia should be higher for firms operating in countries where shocks co vary more with the domestic ones second hysteresis and potential losses induced by fixed and sunk costs of production imply that risk premia should be higher for firms operating in countries where is costlier to enter our empirical analysis confirms these predictions and delivers a decomposition of firm level risk premia into indi

electricity consumption and ict in the french service sector the paper documents the evolution of electricity use and the development of information and communication ic technologies in the french service sector to that purpose we put together two data sets documenting electricity consumption and the diffusion of ic capital goods using a simple factor demand model we estimate the structural parameters of the model using both the time series and the cross sectional dimension of the data and allow for a specific effect of ic capital goods on the efficiency of electricity in production we obtain robust results showing that once controlled for technical progress prices and heated areas electricity intensity of production increases with computers and software while it decreases with the diffusion of communication device

the effects of internet usage and economic growth on co2 emissions in oecd countries a panel investigation this paper estimates the short and long run effects of internet usage and economic growth on carbon dioxide co2 emissions using oecd panel data for the period 1991 2012 the pedroni panel cointegration test confirms that the variables are cointegrated although pooled mean group pmg estimates indicate a positive significant long run relationship between internet usage and co2 emissions the coefficient is very small and no causality exists between them which both imply that the rapid growth in internet usage is still not an environmental threat for the region the study further indicates that economic growth has no significant short run and long run effects on co2 emissions internet use stimulates both financial development and trade openness the findings offer support in favor of the argument that oecd countries can promote their internet usage without being significantly concerned about its environmental consequences but the future emissions effect of internet usage cannot be ruled out as is evident from the variance decomposition analysis therefore this study recommends that in addition to boosting the existing measures for combating co2 emissions oecd countries need to use ict equipment not to simply reduce its own carbon footprint but also to exploit ict enabled emissions abatement potential to reduce emissions in other sectors such as the power energy agricultural transport and service sectors

strategic investments and the development of multinationals a model of multinational behavior is presented in which either the existence or absence of multinationals can be a nash equilibrium outcome the key determinant is the relationship between plant scale economies a force for geographic centralization and multiplant economies plus transport costs leading to multinationality the model predicts that multinational enterprise production arises when firm specific and transportation costs are large relative to plant scale economies the latter are both a technological and a strategic variable in the entry decision copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

spacey parents and spacey hosts in foreign direct investment shocks on fdi of some parent country in a host affect the same parent s fdi in other hosts shocks on a parent s fdi in some host affect other parents fdi in the same host in general equilibrium shocks on fdi between any country pair will affect all country pairs fdi using cross sectional data on fdi among 22 oecd countries in 2000 we use a spatial estimation framework to allow for all three modes of interdependence simultaneously thereby distinguishing between market size related and remainder interdependence our results highlight the complexity of multinational enterprises investment strategies and the interconnectedness of the world investment system

relying on the information of interested parties we investigate the conventional wisdom that competition among interested parties attempting to influence a decisionmaker by providing verifiable information elicits all relevant information we find that if the decisionmaker is strategically sophisticated and well informed about the relevant variables and about the preferences of the interested party or parties competition may be unnecessary to achieve this result if the decisionmaker is unsophisticated or not well informed competition is not generally sufficient if the interested parties interests are sufficiently opposed however or if the decisionmaker is seeking to advance the parties welfare then competition can reduce or even eliminate the decisionmaker s need for prior knowledge about the relevant variables and for strategic sophistication in other settings only the combination of competition among information providers and a sophisticated skepticism is sufficient to allow effective decisionmaking

strategic communication with lying costs i study a model of strategic communication between an uninformed receiver and an informed but upwardly biased sender the sender bears a cost of lying or more broadly of misrepresenting his private information the main results show that inflated language naturally arises in this environment where the sender almost always claims to be of a higher type than he would with complete information regardless of the intensity of lying cost there is incomplete separation with some pooling on the highest messages the degree of language inflation and how much information is revealed depend upon the intensity of lying cost the analysis delivers a framework to span a class of cheap talk and verifiable disclosure games unifying the polar predictions they make under large conflicts of interest i use the model to discuss how the degree of manipulability of information can affect the trade off between delegation and communication copyright 2009 wiley blackwell

privatization of the esi broadening the debate abstract the debate over the privatization of electricity in the uk has been conducted across too narrow a terrain being primarily concerned with regulation for optimality in the context of static if uncertain conditions of supply and demand insufficient account has been taken of dynamic agencies in formulating and bringing about progressive industrial change something of great importance in the light of their weakness in the uk context consequently a number of deficiencies in the uk esi have been neglected in the debate over privatization and are not liable to be rectified by it in practice

is fta epa effective for a developing country to attract fdi the knowledge capital model revisited to prepare an answer to the question of how a developing country can attract foreign direct investment fdi this paper explored the factors and policies that may help bring fdi into a developing country by utilising an extended version of the knowledge capital model with a special focus on the effects of a free trade agreement fta or an economic partnership agreement epa between a pair of market and non market countries simulations with the model revealed the following i although fta epa generally tends to increase fdi to a developing country the possibility of improving welfare through increased demand for skilled and unskilled labour decreases as the size of the country grows ii a developing country may suffer severe welfare losses through fta epa if the availability of skilled labour is extremely limited and iii a developing country can enhance welfare gains from a fta and it is even possible to recover the welfare effects from negative to positive by making the arrangement an epa

vertical multinationals and host country characteristics abstract we inquire into the question of what country characteristics particularly market size and labor force composition attract inward investment this approach is motivated by the empirical observation that the poorest countries attract a far smaller share of world direct investment than their share of income small markets receive less investment per capita than larger ones we develop a model that generates both stylized facts in equilibrium suggesting the existence of a development trap for small skilled labor scarce countries