the contribution of nonhomothetic preferences to trade abstract this paper estimates the economic significance of preference nonhomotheticity in international trade tastes are assumed to be identical but budget shares depend on per capita income a linear expenditure system is estimated for 34 countries over 11 commodity aggregates a counterfactual exercise is conducted to estimate the volume of trade caused by deviations from homotheticity the results indicate that nonhomothetic preferences may account for as much as one quarter of interindustry trade flows

who wants to globalize consumer tastes and labor markets in a theory of trade policy beliefs although the allure of consumption is the engine of globalization political economists have tended to ignore varying consumer tastes as a potential source of beliefs about trade policy this article develops a theory of trade policy preferences that adds the notion of varying consumer tastes to the standard labor market application of the heckscher ohlin trade model the theory which can explain trade preferences both across individuals and countries is supported by an empirical analysis of survey data from 41 nations heavy consumers of exportables are found to be more protectionist than heavy consumers of imports and import competing goods moreover citizens in countries with expensive tradable goods see trade liberalization as a remedy to the rents they pay for protectionism other findings also support the more conventional labor market side of the heckscher ohlin model

non homothetic preferences and iprs protection abstract there are two opposite views regarding whether stronger protection of intellectual property rights iprs will benefit or hurt the south we provide a unification using a model of directed innovations with identical but non homothetic preferences for the south a major benefit of protecting iprs is incentivizing innovations that better address its needs the directed innovation benefit and a major cost is yielding monopoly rents to innovators the monopoly rent cost when preferences are non homothetic the directed innovation benefit decreases in south s income because consumption baskets of the south become more similar to those of the north while the monopoly rent cost increases in the south s income because higher income admits greater monopoly markups the combined effect implies that the costs of iprs protection tend to outweigh the benefits for mid income countries while the opposite is true for low income ones we discuss the policy implications of this observation

market failure in incentive based regulation the case of emissions trading abstract among the existing evaluations of the us epa s emissions trading program a consensus has emerged while the program has resulted in significant cost savings it has not even approximately achieved a cost effective allocation of the control responsibility the cost savings have been smaller and the trades fewer than might have been expected at the outset of the program in this article we explore one hypothesis which purports to explain the divergence between the cost minimizing and the observed pattern of trades for nonuniformly mixed pollutants the trading process hypothesis attributes some significant proportion of this divergence to the nature of the process by which emission reduction credits are traded under the bubble policy an examination of actual bubble trades reveals that the actual trading process is sequential and bilateral and hence differs considerably from the implicit process modeled in the existing empirical studies simulations of this more realistic trading process suggest that the resulting equilibria deviate considerably from cost effective allocations of the control responsibility

a comparison of two marketable discharge permits systems abstract this paper is an extension of a krupnick w oates and e van de verg j environ econom management10 233 247 1983 their proposed permit system is shown to be formally equivalent to w d montgomery s j econom theory5 395 418 1972 pollution permit system under perfect competition however under noncompetitive assumptions the two systems function differently while montgomery s system may lead to large transaction costs polluters under krupnick et al s pollution offset system can be free riders benefiting from the transactions of others finally some empirical evidence suggests that the pollution offset system may be the most promising but only after several conditions are satisfied

explaining import quality the role of the income distribution abstract we examine a generalized version of flam and helpman flam h helpman e 1987 vertical product differentiation and north south trade american economic review 77 810 822 in which consumption prices for quality differentiated goods are rising in household income we provide propositions for aggregating this relationship across heterogenous households to map cross country differences in income distributions to cross country differences in import price distributions the theoretical predictions are examined and confirmed using disaggregated data on prices of traded goods and micro data on household income from the luxemburg income study country pairs with more similar income distributions have more similar import price distributions whether similarity is measured by 1st 4th moment statistics population and consumption shares within world income and product price quantiles or income and price dis similarity indices

inequality and trade we incorporate demand side considerations in trade in a systematic but straightforward way we do so by focusing on the role of inequality in the determination of trade flows and patterns with nonhomothetic preferences when countries are similar in all respects but asset inequality we find that trade is driven by specialization in consumption n ot production these assumptions allow us to generate some interesting international spillover effects of redistributive policies we also look at the effects of combining inequality and endowment differences on trade flows and see that this has implications for the mystery of the missing trade we then study a model of monopolistic competition and find a novel vshaped relationship between the ratio of inter industry to intra industry trade and a country s inequality finally we look at how international differences in factor endowments affect this relationship between the ratio of inter to intra industry trade and inequality our theory formalizes as well as modifies linder s conjecture about the relationship between intraindustry trade and the extent of similarity between trading partners

economic incentives to improve water quality in agricultural landscapes some new variations on old ideas agricultural nutrients and other emissions remain a primary source of water quality degradation in much of the nation many such sources are classified as nonpoint sources under the clean water act and are therefore exempt from most federal regulations and enforceable standards in addition many agricultural nonpoint source emissions are difficult to measure and the damages that result from them depend on the amount that is transported to the waterways nutrient runoff particularly nitrogen and phosphorous from intensive row crop agriculture in much of the cornbelt exemplifies these issues both the lack of enforceable standards and the physical characteristics of nutrient fate and transport make the design of efficient policy challenging as witnessed by the lack of significant progress over the last several decades this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item thi this abstract was borrowed from another version of this item

economic growth and sector dynamics abstract this paper analyzes the endogenous determination of sectors in a growing economy it assumes that there are traditional sectors and modern sectors and economic growth is driven by rising productivity of the modern sectors it also assumes that individuals are heterogeneous which leads to increasing marginal opportunity costs in creating new modern sectors we show that under these main assumptions economic growth first increases diversification to sectors and then reduces it we also show that for the equilibrium to be stable and well behaved it is required that the modern and traditional sectors should be substitutes and not complements

point nonpoint effluent trading with spatial heterogeneity potential earnings from permits sales may provide an incentive for farmers to accept water quality regulation we derive optimal adjustments of point nonpoint effluent trading ratios for heterogeneity in marginal environmental damage and degradation retention of the pollutant across locations in a watershed a simulation based on data from the kymi river valley finland indicates that farmers are the greatest suppliers of permits as expected but that gains from trading vary substantially some farmers may become net buyers of permits and thus net losers from regulation the benefits of effluent trading are distributed unevenly among point sources as well copyright 2008 oxford university press

on the heterogeneous welfare gains and losses from trade how are the gains and losses from trade distributed across individuals within a country first we document that tradable goods constitute a larger fraction of expenditures for poor households second we build a trade model with nonhomothetic preferences to generate the documented relationship between tradable expenditure shares income and wealth and uninsurable earnings risk to generate heterogeneity in income and wealth third we use the calibrated model to quantify the differential welfare gains and losses from trade along the income and wealth distribution in a numerical exercise we permanently reduce trade costs so as to generate a rise in import share of gdp commensurate with that seen in the data from 2001 to 2014 we find that households in the lowest wealth decile experience welfare gains over the transition measured by permanent consumption equivalents that are 67 percent larger than those in the highest wealth decile

markets for water rights under environmental constraints abstract the cumulative impact of pollutants on water quality at a given location along a river is a function of prior loadings as well as pollution and surface flows at that particular site the question of whether it is possible to maintain water quality under alternative mechanisms for allocating surface water and pollution rights is addressed we model the optimal allocation of surface water and pollution rights along a river with water quality constraints due to cumulative effects the shadow values of water and pollution rights are contingent on location it is shown that a nash equilibrium in a market for tradable surface water rights in conjunction with a market for pollution damages implements the optimal solution the market supports location specific prices for both consumptive water rights and pollution damages

trade offs in designing markets with multiple objectives abstract this paper explores some of the problems involved in designing markets with multiple objectives the first part of the paper considers the issue of how such markets are designed in theory while the second part reviews some evidence on actual applications in the field of air pollution control

a trading ratio system for trading water pollution discharge permits abstract the fact that water flows to the lowest level uni directionally is a very specific and useful property of water by utilizing this property we design a trading ratio system trs of tradable discharge permits for water pollution control such a trading ratio system has three main characteristics 1 the zonal effluent cap is set by taking into account the water pollutant loads transferred from the upstream zones 2 the trading ratios are set equal to the exogenous transfer coefficients among zones and 3 permits are freely tradable among dischargers according to the trading ratios this paper shows that the trs can take care of the location effect of a discharge and can achieve the predetermined standards of environmental quality at minimum aggregate abatement costs problems with hot spots and free riding can be avoided and the burdens on both dischargers and the environmental authority should be relatively light

incremental and average control costs in a model of water quality trading with discrete abatement units this paper answers three questions related to the discrete nature of pollution abatement i does a source s incremental control cost as defined by the u s environmental protection agency necessarily exceed its average control cost ii is incremental control cost a better approximation of a source s willingness to pay for abatement credits than average control cost and iii exactly how does trading in discrete and continuous abatement markets differ we find that the answer to the first two questions are both no suggesting that the u s environmental protection agency needs to refine its reliance on incremental control cost as the sole measure upon which to assess the financial feasibility of water quality trading in answer to the third question we show that the outcome of bilateral trading in the presence of discrete abatement is determined by comparing the gains from trade associated with the full sequence of possible sunk cost trading scenarios for the most common case where trading partners average control cost curves cross the trading outcome with discrete abatement is inherently sensitive to the initial allocation of abatement responsibilities

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

marketable permits market power and cheating abstract in this paper we present a model of a noncompliant firm operating in a marketable pollution permit market in the main result of the paper we show how compliance is related to the initial distribution of permits a firm with market power will cheat less the larger its endowment of permits is from a fixed stock of permits the competitive fringe however will cheat more as its endowment of permits is reduced generating an ambiguous global impact on cheating

market power and transferable property rights the appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal when competition is not a foregone conclusion the question naturally arises as to how a firm might manipulate the market to its own advantage this paper analyzes the issue of market power in the context of markets for transferable property rights first a model is developed that explains how a single firm with market power might exercise its influence this is followed by an examination of the model in the context of a particular policy problem the control of particulate sulfates in the los angeles region

uneven growth a framework for research in development economics the textbook paradigm of economy wide development rests on the premise of balanced growth that is on the presumption that all sectors will grow in unison over time as a country gets richer this view has served us reasonably well in some circumstances but is not particularly useful for accounts of modern under development in many developing countries economic growth has been fundamentally uneven software development the outsourcing of services sectoral technological change quick compositional shifts between agriculture and other sectors the rise of particular exports special economic zones and so on this paper will discuss both the sources of uneven growth and its implications with greater emphasis on the latter the paper will argue that much of the distributional issues or the reactions to globalization that we see in modern developing societies can be viewed as reactions to a growth process that is fundamentally uneven and is indeed perceived as such

effects of participative pricing on consumers cognitions and actions a goal theoretic perspective using a goal theoretic approach we examine how goal related mind sets influence consumers reactions to participative pricing mechanisms where consumers participate in price determination e g auctions relative to economically equivalent fixed price offers we show that the congruence between individuals notions of high perceived control over shopping situations and participative price environments produces an implementation oriented mind set that influences cognitions and intentions in the absence of such congruence we can independently create implemental mind sets that replace the natural deliberative thinking of consumers contemplating a purchase demonstrating the subtle yet powerful role mind sets play in dictating thought and action is a unique contribution of this research

markets for tradeable emission and ambient permits a dynamic approach this paper discusses trade mechanisms in pollutionpermit markets proofs are given that sequential bilateral trade in tradeable emissions permitsconverges to a market equilibrium with minimal totalcosts of pollution control if ambient or depositionpermits are traded the convergence of bilateraltransactions occurs only in the case of a singlereceptor for multiple receptors the proof ofconvergence for tradeable emissions and ambientpermits is given for two trade mechanisms sequential multilateral trade and a walrasian auction

efficiency gains under exchange rate emission trading in the case of emission of non uniformly dispersed pollutants such as so2 the negative effects depend on the location of the sources a unit increase at one source must be compensated by either a larger or smaller reduction at another source to keep the negative effects at the same level emission trading between countries is possible under the second sulphur protocol exchange rate trading and third party problems are studied within a simultaneous model facilitating impositions of various environmental constraints simulations based on the negotiated emission quotas are offered results indicate potential cost savings of 19

a ricardian model with a continuum of goods under nonhomothetic preferences demand complementarities income distribution and north south trade this paper develops a ricardian model of trade in which goods are indexed according to priority and higher indexed goods are consumed only by richer households south north has a comparative advantage in lower higher indexed goods and hence specializes in goods with lower higher income elasticities of demand product cycles and a southern terms of trade deterioration result from faster population growth and uniform productivity growth in south and a global productivity improvement south s domestic income redistribution policy can improve its terms of trade so much that every household in south may be better off at the expense of north

emission trading in europe with an exchange rate this paper explores the analytical and empirical properties of a new method for emission trading according to a fixed exchange rate the exchange rate is based on the ratios of the marginal costs of abatement in the optimal solution in order to account for the impact of the location of emission sources on the deposition it is shown that generally this system will not achieve the optimal solution and does not guarantee that environmental deposition constraints are not violated although total abatement costs are always reduced a routine was developed to mimic trading as a bilateral sequential process subject to an exchange rate in the example used results for so2 emissions in europe show that starting from a uniform reduction exchange rate trading achieves higher cost savings than one to one trading without achieving the cost minimum sulfur deposition targets are not violated since the initial emission allocation overfulfilled targets at many places the results are sensitive to pre trade emission levels the transaction costs the availability of information on potential cost savings and assumptions made on the behavior of trading partners

tradeable permits for pollution control when emission location matters what have we learned our knowledge about tradeable permit approaches to pollution control has grown rapidly in the two decades in which they have received serious analytical attention not only have the theoretical models become more focused and the empirical work more detailed but we have now had over a decade of experience with them in the u s this article draws upon economic theory empirical studies and actual experience with implementation to summarize what we have learned about applying tradeable permits to air pollution control in the special circumstance where the spatial aspects of the problem are a prime consideration

distribution and growth in an economy with limited needs variable markups and the end of work this article studies a model of the distribution of income under bounded needs utility derived from any given is bounded from above and demand is therefore not isoelastic on the other hand introducing new varieties always increases utility it is assumed that each variety is owned by a monopoly workers can specialise in material goods production or in the knowledge sector which designs new varieties as productivity increases the economy moves from a solovian zone where wages increase with productivity to a marxian zone where they paradoxically decline with productivity

reversing property rights practice based approaches for controlling agricultural nonpoint source water pollution when emissions aggregate nonlinearly nonpoint source water pollution remains a major issue despite decades of research and sizable conservation programs we suggest that by taking advantage of contemporary modeling and optimization approaches good approximations to physical relationships can be constructed so that even in the presence of unobservable field emissions and nonlinear fate and transport relationships standard economic tools of command and control requirements performance standards and trading can be implemented the boone river watershed in the u s state of iowa is used for empirical demonstration although the approach can be used to construct voluntary conservation policies the described policies involve imposing requirements on agricultural polluters rather than relying on voluntary actions alone