variable returns to scale in production and patterns of specialization this paper discusses some trade and welfare implications of the two sector model based on increasing returns to scale irs in one industry and decreasing returns to scale drs in the other it has been shown by horst herberg and murray kemp that given homothetic production functions with irs in one industry and drs in the other the production possibilities frontier ppf is strictly concave to the origin near the irs axis and strictly convex to the origin near the drs axis while this result constitutes an important finding and is contrary to the general impression among economists even twelve years after the publication of herberg and kemp s paper no attempt has been made to analyze its implications for welfare and patterns of specialization in this paper i consider a simple twocommodity model with irs in one industry and drs in the other and discuss some interesting implications of variable returns to scale vrs first i demonstrate that in this model if a small open economy specializes completely in production it will do so in the drs commodity and not in the irs commodity as is generally believed second if at a given price ratio an internal production equilibrium exists a welfaremaximizing small open economy will never specialize completely in production even though the ppf exhibits decreasing opportunity costs over a part of its range third given output generated economies and diseconomies of scale welfare maximization for a small country requires a permanent tax subsidy scheme encouraging expansion of the irs industry and contraction of the drs industry finally in a two country model with identical tastes and technology across the countries free trade equilibrium may result in incomplete specialization by the exporter of the irs commodity and complete specialization by the exporter of the drs commodity in the course of the analysis i argue that tinbergen s formulation of frank graham s case for protecting the irs industry is incorrect i then present a possible reformulation of it in section i the basic production model is introduced in section ii the model is analyzed and in section iii it is argued that all the results continue to hold in the multifactor case

energy consumption and economic growth in south africa reexamined a nonparametric testing apporach this paper is an effort to investigate claims concerning granger causality relationship from energy consumption to economic growth in south africa we adopt a nonparametric bootstrap method to reassess evidence supporting granger causality and unravel findings of long run unidirectional causality running from energy consumption to economic growth this implies that energy conservation policies will negatively impact economic growth in south africa in addition the results of this study have implications on co2 emissions in south africa given that coal accounts for about 72 of energy this suggests that energy use would have a long run effect of raising the country s co2 emission levels hence there might be a need to develop a more balanced energy structure which will include higher share of renewable energy a further monte carlo experiment performed reveals that asymptotic granger causality test suffers size distortion problem for south african data these findings provide support for use of a bootstrap methodology and also imply that the results presented in this study are likely to be more reliable

the impacts of transport energy consumption foreign direct investment and income on co2 emissions in asean 5 economies abstract in this study we incorporate new variables and assess the impact of transportation sector s energy consumption and foreign direct investment on co2 emissions for asean 5 economies using the cointegration and granger causality methods this study also attempts to validate the environmental kuznets curve ekc hypothesis our results reveal that the co2 emissions and their determinants are co integrated only in indonesia malaysia and thailand the long run elasticity estimation suggests that income and transport energy consumption significantly influence co2 emissions whereas fdi is not significant economic growth plays a greater role in contributing to co2 emission in asean 5 nonetheless we find that the inverted u shape ekc hypothesis is not applicable to the asean 5 economies especially in indonesia malaysia and thailand in the long run the bi directional causality between economic growth and co2 emissions is detected in indonesia and thailand while we find unidirectional causality running from gdp to co2 emissions in malaysia we also observe bi directional causality between transport energy consumption fdi and co2 emissions in thailand and malaysia as an immediate policy option controlling energy consumption in transportation sector may result in a significant reduction in co2 emissions however this may slow the process of economic growth in malaysia and indonesia alternatively we suggest policymakers to place more emphasis on energy efficient transportation system and policies to minimise fossil fuel consumption thus the quality of environment can be improved with less deleterious impact on economic growth

multiple equilibria coordination and transitional growth abstract we study a small open economy with two sectors and two factors of production in one of the sectors external economies of scale are generated through the industry level capital input this leads to a divergence between private and social production possibility frontiers as well as to multiple equilibria the equilibrium selection problem that arises is solved by agents who follow a simple trial and error learning rule the growth path of the economy as agents learn lies below the production possibility frontier and may display cyclical transitional dynamics we also show that coordination problems which may prevent the economy from attaining the good equilibrium may be alleviated by the temporary use of policy instruments that shape the allocation of resources

gains from trade under variable returns to scale recently several trade theorists have investigated the welfare consequences of international trade under variable returns to scale for example kemp and negishi 11 using the revealed preference arguments obtain the sufficient conditions under which the opening of trade and an improvement in the terms of trade are nonharmful in the presence of variable returns to scale production subsidies and consumption taxes eaton and panagariya 7 reexamine these issues in the context of pareto welfare criterion it is noteworthy that the assumption of constant returns to scale is retained in their discussions on production subsidies and consumption taxes 1 the purpose of this paper is to explore the welfare implications of tariffs and consumption taxes as well as the welfare rankings of these policy instruments under variable returns to scale we obtain several interesting results for example social welfare for a small country can be maximized by introducing in addition to free trade a policy of production tax cum subsidy such that the output of the industry exhibiting greater smaller returns to scale is pushed to the maximum minimum a higher tariff rate needs not result in a lower welfare whereas a higher rate of consumption tax necessarily leads to a lower welfare furthermore a tariff may be superior to an equivalent consumption tax the paper evolves as follows the model and assumptions are presented in section ii section iii is the analysis regarding non optimality of free trade free trade versus no trade

production possibilities with a public intermediate good this paper considers the shape of the production possibility set with a public intermediate good of the atmos phere type the elements which tend to give rise to a concave product ion frontier are isolated from those which tend to generate a convex one by using the notion of the production surface the results from earlier models are both generalized and sharpened

returns to scale in canadian manufacturing an interprovincial comparison this paper measures the degree of returns to scale at the two digit standard industrial classification sic in canadian manufacturing employing both gross output and value added data using a model developed by r j caballero and r k lyons the study distinguishes between internal and external returns to scale the caballero and lyons model is extended by disaggregation to the provincial level in order to measure the returns to scale of geographic provincial concentration the empirical results suggest that in canada there are increasing returns that are primarily national rather than internal to the province or the industry

a theoretical explanation of some stylized facts of economic growth this paper presents a three good two country general equilibrium model that is consistent with several stylized facts of economic growth the three goods are manufactures agriculture and services manufactures are subject to economies of scale the model predicts that services a nontraded good must be more expensive in the country with higher per capita income it also shows that as per capita income increases we should expect the productivity in commodities relative to services to rise the model is able to generate many other stylized facts of economic growth

market structure and ldcs manufactured export performance typically trade theory and analysis of domestic market structure have proceeded separately this paper considers ldcs performance in exporting manufactured products using a model which embraces customary explanatory variables namely factor endowments scale economies and skill levels and a market structure variable in marked contrast to practice in other empirical studies the data employed are not based on coefficients derived from us industries but are taken from local industrial censuses undertaken by individual countries differences in results across countries indicate the need for care in determining policy prescriptions for individual countries with respect to the degree of competition

convergence in carbon dioxide emissions among industrialised countries revisited this paper examines the existence of stochastic and deterministic convergence of carbon dioxide co2 emissions in 23 countries over the period 1960 2002 for that purpose we conduct unit root testing by employing the recently developed panel stationarity test of carrion i silvestre et al carrion i silvestre j l del barrio castro t lopez bazo e 2005 breaking the panels an application to the gdp per capita econometrics journal 8 159 175 which assumes a highly flexible trend function by incorporating an unknown number of structural breaks we accommodate general forms of cross sectional dependence as well as control for finite sample bias through bootstrap methods overall our analysis provides strong evidence supporting both stochastic and deterministic convergence in co2 emissions thus confirming strazicich and list strazicich m c list j a 2003 are co2 emission levels converging among industrial countries environmental and resource economics 24 263 271 and westerlund and basher westerlund j basher s a 2007 testing for convergence in carbon dioxide emissions using a century of panel data environmental and resource economics forthcoming findings of convergence

impact of industrialisation on co2 emissions in nigeria abstract developing countries including nigeria aim to achieve industrialisation and sustainable development however there are few empirical studies that examined the impact of industrialisation led economic transformation on carbon emissions in developing countries this is the focus of this study the paper investigates the impact of industrial value added on co2 emissions in nigeria using the kaya identity framework and augmented dickey fuller adf johansen s cointegration technique and vector error correction model vecm the data spans from 1980 to 2011 the result of the adf test indicates that continual long term policies that exert permanent shocks on the variables are required to achieve economic development industrialisation and co2 reduction the result of the analysis shows that industrial value added has an inverse and significant relationship with co2 emissions which suggests that there is no evidence that industrialisation increases carbon emissions in nigeria gdp per capita and population has positive and significant impacts on co2 emission energy intensity and carbon intensity has positive but very weak significant impact at 10 level on co2 emission the paper recommends that policy makers in nigeria should pursue pragmatic industrialisation policies coupled with modest decarbonisation and energy efficiency measures in order to ensure long term industrial economic and sustainable development

are fluctuations in electricity consumption per capita transitory evidence from developed and developing economies abstract this paper investigates the unit root properties of electricity consumption per capita of 67 developed and developing countries for the period 1971 2010 to examine the stationary properties of electricity consumption per capita we have adopted lee and strazicich 2003 2004 test of unit root that allows us to test for at most two endogenous breaks and uses the lagrange multiplier lm test statistics results show that 65 country series reject the unit root null hypothesis except for 2 country series thus our empirical findings provide significant evidence that electricity consumption per capita is stationary in almost all countries considered the stationarity of electricity consumption per capita indicates that it should be possible for the series to forecast future movements in the energy consumption based on the past behaviors of the series

welfare effects of quotas under variable returns to scale recently there has been a growing use of quantitative restrictions on imports by countries for protecting their import competing industries it is well known that the quantitative restriction on imports set below the free trade level would result in higher domestic prices smaller quantities of importables available to consumers and hence a reduction in national real income thus import quotas similar to tariffs in a small economy reduce welfare this result has been derived in the traditional heckscher ohlin trade model with production functions subject to constant returns to scale crs while the assumption of crs greatly simplifies the analysis it is not easily justified in view of reality firms usually are exposed to various kinds of externalities which give rise to economies or diseconomies of scale

increasing returns and the gains from trade it is known that gains from trade are positive in the presence of increasing returns to scale if all increasing returns industries expand in the shift from autarky sufficient conditions for gains when some increasing returns industries expand and others contract suffer from the limitations that the production frontier must be convex changes must satisfy a prespecified hierarchical pattern or that total factor supplies must be fixed between equilibria conditions which can not generally be assured this paper develops a necessary and sufficient condition for gains and from it a sufficient condition that does not depend on these restrictions copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

a note on the neoclassical ambiguity and the specific factor production model under variable returns to scale abstract this note investigates the relationship between commodity price changes and factor rewards in a specific factor production model that admits variable returns to scale the principal result is that in the presence of variable returns to scale the so called neoclassical ambiguity may be resolved without resorting to detailed knowledge of the mobile factor s preferences that is to say the effect of a commodity price change may as it does with the returns to those factors specific to each industry raise or lower the real reward of the mobile factor in terms of either commodity depending only on the characteristics of the technology

decomposition of ireland s carbon emissions from 1990 to 2010 an extended kaya identity in recent decades ireland has been an important example of a development pathway where rapid economic growth was accompanied by rising energy demand and increasing carbon emissions understanding the driving forces of carbon emissions is necessary for policy formulation and decomposition analysis is widely used for this purpose this study uses an extended kaya identity as the scheme and applies the log mean divisia index lmdi i as the decomposition technique change in carbon emissions is decomposed from 1990 to 2010 and includes a measure of the effect of renewable energy penetration results illustrate that scale effects of affluence and population growth act to increase emissions and are countered primarily by energy intensity and fossil fuel substitution renewable energy penetration has a minor effect but has been increasing in recent years policy will need to significantly reduce intensity and increase renewables if applicable targets are to be reached this requires not only a comprehensive suite of policies and measures but emphasis on the development path and non technical change for optimal outcomes

interdependence of industries coordination failure and strategic promotion of an industry abstract this paper analyzes coordination failure that arises from interdependence of industries assuming one of these industries is characterized by oligopolistic competition marshallian externalities are logically explained the conditions that create external economies are identified and policy implications for strategic promotion are discussed

analyzing cost of grid connection of renewable energy development in china abstract renewable energy is believed to be the central issue in sustainable development literatures on renewables costs are rather sparse especially on costs of integration and system balancing the objective of this paper is to fill the research gap by providing an assessment for the cost of china s grid connected renewable energy development and analyze its sharing between different stakeholders due to china s pricing mechanism of renewable energy and their cost decreasing potential the pricing model of feed in tariff and dynamic technological learning processes are employed in the estimation of purchasing cost the positive bias is overcome by considering china s energy saving dispatching policy the results suggest that purchasing cost would be 32 57 40 80 billion yuan over 2012 2020 and peak in 2017 grid integration costs which further involve costs of grid infrastructure and system balancing are also investigated we find that grid infrastructure will cost 27 88 billion yuan by 2015 and soar to 45 32 billion by 2020 while system balancing will cost 31 49 billion yuan in 2015 and 63 97 billion yuan in 2020 among which a substantial part over 60 comes from electricity loss in energy transfer the different parts of these costs are underwritten by disparate participants due to china s renewable energy policies and its institutional arrangement purchasing cost is shared by power consumers through res the cost of grid infrastructure is mainly covered by grid enterprises and there is no mechanism to specify how to share the cost electricity loss during system balancing which might become a major obstacle for system balancing

increasing returns dynamic stability and international trade abstract a simple two country two good model in which economies of scale form the basis of international trade is presented it is shown that the larger country exports the good characterized by increasing returns and imports the good subject to constant returns a key feature of the paper is a comprehensive stability analysis it turns out that a normal output price response is necessary for d stability furthermore the marshall lerner condition must be satisfied in terms of the short run import demand elasticities for local dynamic stability finally if international factor mobility is permitted cross hauling of specific factors may be observed

trade spatial separation and the environment we develop a simple two sector dynamic model to show how pollution can provide a motive for trade by spatially separating incompatible industries we assume that the production of smokestack manufactures generates pollution which lowers the prod uctivity of an environmentally sensitive sector farming two identical unregulated countries will gain from trade if the share of world income spent on smokestack goods is high in contrast when the share of world income spent on the dirty good is low trade can usher in a negatively reinforcing process of environmental degradation and real income loss for the exporter of smokestack goods 1999 elsevier science b v all rights reserved

immiserizing transfer under variable returns to scale this paper examines the welfare consequences of a unilateral transfer for both the transfer paying and the transfer receiving country in which the production functions are subject to variable returns to scale we obtain the conditions for the strong paradox that is the welfare of the transfer paying country improves and that of the transfer receiving country declines in the standard two country framework the conditions for the weak paradox that is both the transferor and transferee gain or lose simultaneously and the normal results that is the transferor loses and the transferee gains are also derived transferts appauvrissants quand les rendements a l echelle sont variables ce memoire examine les effets de bien etre d un transfert unilateral a la fois pour le pays donateur et le pays recipiendaire quand les fonctions de production ont des rendements variables a l echelle les auteurs d6veloppent les conditions qui sous tendent le paradoxe fort i e le cas oii le bien r ils d6rivent aussi les conditions qui sous tendent le paradoxe faible i e le cas oui les deux pays gagnent ou

measuring market distortion international comparisons policy and competitiveness this paper develops a framework to simultaneously estimate production possibility frontiers and measure distortions in factor and product markets the econometric results based on a panel of 61 countries over the period 1970 through 1985 reveal very little distortion in factor markets but considerable distortion in product markets in addition the distortions tend to vary with the cyclical behaviour of economic activity further the results suggest that in order to improve efficiency commercial policy should aim at reducing product market distortions rather than factor market ones

understanding risk of bubbles in cryptocurrencies abstract as cryptocurrencies emerged only recently they are subject to only very limited financial regulations in this paper we study which variables can predict bubbles in the prices of eight major cryptocurrencies focusing on uncertainty measures as predictors we detect multiple bubble periods for all eight cryptocurrencies particularly in 2017 and early 2018 we find that higher volatility trading volume and transactions are positively associated with the presence of bubbles across cryptocurrencies regarding the uncertainty variables the vix index consistently demonstrates negative relationships with bubble occurrence while the epu index mostly exhibits positive associations with bubbles these results may assist authorities in designing appropriate regulations

factor mobility trade and welfare abstract the paper develops a north south model which is driven by scale economies in the modern sector the model predicts that skilled and unskilled labor migrate from south to north and capital migrates from north to south migration of skilled labor and capital exhibits complementarity with trade while migration of labor may exhibit complementarity or substitutability if the terms of trade effects are ignored small movements of all factors affect the welfare of the population in south negatively and of that in north positively the effects of migration on the terms of trade are ambiguous in general

industrial clusters equilibrium welfare and policy this paper studies the size and number of industrial clusters that will arise in a multi country world in which one sector has a propensity to cluster because of increasing returns to scale it compares the equilibrium with the world welfare maximum showing that the equilibrium will generally have clusters that are too small while there are possibly too many countries with a cluster allowing national governments to subsidize will move the equilibrium to the world welfare maximum so there is no race to the bottom if subsidy rates were capped then there would be a proliferation of too many and too small clusters

reduction potential of co2 emissions in china s transport industry newhuadu business school research fund china sustainable energy program g 1311 19436 ministry of education 10 jbg 013 national social science foundation of china 71203186

transboundary pollution and the gains from trade we analyse the effects of transboundary pollution on trade patterns and welfare in a general equilibrium trade model production in a dirty industry generates pollution that negatively effects productivity both at home and abroad in a clean industry trade may lead to the spatial separation of production but the existence of transboundary pollution can offset the benefits from specialization we present a general model in which the effects of a country s pollution is country specific we analyse particular cases that correspond to an acid rain problem and a problem in which one country has a cleaner technology than the other we also present some results for small open economies to examine the effects of transboundary pollution in the absence of terms of trade effects

accumulation of human capital in ldcs in the presence of unemployment this paper takes up an aggregative growth framework to study how human and physical capital evolve over time as households allocate their investment between the two assets in the context of unemployment of educated labor it develops a general equilibrium model of an economy with two sectors a composite good sector and a schooling sector where output is subject to increasing returns to scale a temporary equilibrium for this economy depends on the endowments of physical and human capital as well as on the output elasticity of returns to scale and the price elasticity of education the dynamic evolution of this economy is explored in terms of the accumulation of the two types of capital a rise in education subsidy increases the demand for education at the cost of investment in physical capital and could lead to inefficient substitution between skilled and unskilled workers in the long run copyright 1994 by the london school of economics and political science

the positive theory of production externalities under perfect competition abstract aggregate cost and factor demand functions are used to develop a local envelope function which is applied in a general equilibrium model with production externalities to shed new light on the relationship between the true economy marginal costs and outputs this relationship induces a structure to the relationship between actual prices and outputs by means of the assumption of no factor demand reversals associated with externality effects we also provide generalisations of the stolper samuelson and rybczynski theorems highlighting the role of the externality effects

economies of scale imperfect competition and the pattern of trade it has been long recognised that economies of scale and market structures have significant impacts on a country s comparative advantage and pattern of trade but the assumption of perfect competition used since the classicists has deterred the analysis of these elements in international trade theory this is evidenced by most of the current textbooks on international trade which usually offer a small section or at best a small chapter on imperfect competition and economies of scale in relation to international trade very recently however a handful of works have appeared that have dealt with economies of scale and imperfect competition in a general equilibrium framework in keeping with the modern theory of international trade negishi i972 krugman i979 i980 dixit and norman i980 helpman i981 and ethier forthcoming a brief summary of these contributions can be given as follows negishi is mainly concerned with proving the existence of equilibrium and gains from trade in a world of imperfect competion krugman i979 using the negishian model basically allows for product differentiation a la dixit and stiglitz i977 the very existence of product differentiation in turn allows for intra industry trade and it also implies that there are gains from trade from consuming more varieties of products even between economies which are identical in factor endowments technology and tastes using this model krugman i980 shows a larger domestic market hypothesis of pattern of trade which says that a country tends to be a net exporter of the products which have relatively larger domestic markets the existence of economies of scale is what explains this dixit and norman present three models of imperfect competition in the first one they consider a cournot model with entry in which it is shown that trade leads to a greater equilibrium number of firms and hence more competition and to an increase in welfare in the second model they examine the effect of trade on product selection in a monopoly model their third model appears to be richest among the three it incorporates product differentiation and intra industry trade as in krugman s papers an economy is divided into two sectors a competitive sector and a monopolistically competitive sector and then equilibrium in a trading world economy is characterised two conclusions stand out first as for the inter industry trade the factor abundance hypothesis the heckscher ohlin theorem explains the pattern of trade second as for the intra industry trade a smaller country has comparative advantage in the production of differentiated goods which are produced in the monopolistically