two stage optimal control problems with an explicit switch point dependence optimality criteria and an example of delivery lags and investment abstract this paper provides necessary conditions for the solution of two stage optimal control problems where the switch point is a choice variable and where the switch point appears as an argument of the integrands in each integral which comprise the criterion index to be maximized problems of this variety have arisen in the exhaustible resource and neoclassical investment literature using the conditions necessary for the solution of these problems we analyze an example of optimal investment in the presence of delivery lags and show how the optimal switch point delivery lag responds to shifts in exogenous parameters

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

discrete equilibrium price dispersion an explicit solution of an equilibrium model with price setting firms and searching customers makes possible a number of comparativestatics predictions about how cost differences among firms search costs of customers and taxes will affect the mean and variance of the distribution of market prices another implication of the model is that a firm s demand depends on the difference between its price and the average price in the market

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

distributional coalitions and other sources of economic stagnation on olson s rise and decline of nations one of the most important recent contributions to the field of comparative political economy is mancur olson s the rise and decline of nations in that work olson deduces from his logic of collective action a series of implications regarding the impact of social organizations in particular distributional coalitions on economic growth that can explain variations in national growth rates across a wide range of time and space this article considers the assumptions upon which that logic is founded the plausibility of the several implications drawn from that logic and the application of the theory to account for differences among five nations in rates of economic growth in the post world war ii era the analysis suggests that the characteristics of group activity emphasized by olson represent at best only a small perhaps negligible part of the explanation of cross national differences in growth instead it suggests that an important source of the variation among nations in growth rates is the international political and economic system in particular the discussion of the german japanese and british cases suggests that stagnation or growth is to a considerable extent the product of a nation s position in the world economy the policy responses through which governments seek to perpetuate or improve that position and the constraints upon or opportunities for growth oriented domestic economic policy posed by that position

delivery lags and buffer stocks in the theory of investment by the firm abstract this paper contains a dynamic model of a firm holding a stock of unfilled orders for output while facing a fixed delivery lag attached to acquiring new capital goods the model leads to a two stage optimal control problem where the initial time interval corresponds to the marshallian short run and the second interval is the period during which deliveries of capital goods may arrive optimality criteria are provided for both time intervals and the behavior of the firm is characterized along both adjustment paths the short run decisions of the firm are shown to be tied to long run decisions planned by the firm

the irony of state strength comparative responses to the oil shocks in the 1970s like two gigantic waves the oil shocks crested over the advanced industrial world during the 1970s the relatively stable postwar petroleum regime managed by the large oil firms and protected by american diplomatic and military strength collapsed in seven years crude oil prices adjusted for inflation increased more than 500 percent a multitude of national security economic and political challenges confronted the advanced industrial states but unlike war where the threat is observable and lines of conflict quickly become apparent the oil shocks cast up problems that were more insidious problems of energy security economic adjustment and industrial competitiveness these international dilemmas could be defined in various ways and a host of policy responses could be brought to bear upon them

sectoral conflict and foreign economic policy 1914 1940 the period from 1914 to 1940 is one of the most crucial and enigmatic in modern world history and in the history of modern u s foreign policy world war i catapulted the united states into international economic and political leadership yet in the aftermath of the war despite grandiose wilsonian plans the united states quickly lapsed into relative disregard for events abroad it did not join the league of nations disavowed responsibility for european reconstruction would not participate openly in many international economic conferences and restored high levels of tariff protection for the domestic market only in the late 1930s and 1940s after twenty years of bitter battles over foreign policy did the united states move to center stage of world politics and economics it built the united nations and a string of regional alliances underwrote the rebuilding of western europe almost single handedly constructed a global monetary and financial system and led the world in commercial liberalization

a post consumer waste management model for determining optimal levels of recycling and landfilling the present study examines the optimal recycling rate for municipal solid waste first an optimal control model is developed to account for the physical costs of recycling the social costs of landfilling and consumers environmental preferences second an optimal solution is simulated using waste disposal data from the helsinki region in finland the benefits from recycling are included in the simulation using the results of a recent contingent valuation study the results of the present research suggest that mandates for achieving 50 recycling in municipalities are not far fetched and are both economically and environmentally justified

a dynamic model of investment and capacity utilization this paper develops a dynamic optimizing model of a firm with quasi fixed factors subject to adjustment costs the utilization rates of the quasi fixed factors are chosen optimally by the firm and the rates of investment in the quasi fixed factors are based on the shadow prices of these factors in the spirit of tobin s q theory of investment capital investment is shown to be negatively related to capital utilization along the path to the steady state however in response to unanticipated demand shocks capital utilization and investment are positively related

foreign growth and domestic performance in a small open economy abstract in this paper we develop a small open economy model of trade with endogenous growth induced by human capital accumulation to analyze the effects of foreign growth on the domestic growth performance stronger foreign growth has the potential to increase domestic growth through a change in the terms of trade for this to happen the domestic attitude toward saving as indicated by the intertemporal elasticity of substitution plays a crucial role for economies with sufficiently thrifty consumers changes in the terms of trade generate funds for domestic investment thereby generating enhanced long term growth if however domestic consumers are less prone to thriftiness foreign growth may lead to lower domestic output growth this result suggests that foreign growth is not necessarily a substitute for a weak domestic attitude toward saving

unemployment collective bargaining and the demand for protection there is a widespread consensus among nonacademic observers that labor unions with large numbers of unemployed members have been central actors in political coalitions demanding protectionist trade policies since the mid 1970s in advanced industrial societies yet trade unions and unemployment are hardly mentioned in most theories of the politics of international trade the purpose of this paper is to develop a theoretical framework for understanding the importance of unemployment as a determinant of protectionist demands that is consistent with optimizing behavior on the part of union members and firms models of labor negotiations derived from cooperative bargaining theory are used to illustrate why the material benefits of protection received by union members and their employers in protected industries increase when union members are unemployed even when workers are risk neutral and capital is immobile

the effects of capital income taxation on international competitiveness and trade flows using an intertemporal equilibrium model this paper analyzes how lower source based taxes on capital income impact trade performance and international competitiveness it shows that depending on import shares and intertemporal and intratemporal substitution elasticities capital accumulation may induce changes in real interest rates and the terms of trade that stimulate domestic saving even if financial capital is perfectly mobile internationally import shares appear important determinants of exchange rate effects numerical simulations illustrate these results copyright 1989 by american economic association

external ambition and economic performance realist approaches to international politics raise the possibility that external policies based on expanding military power may undermine the economic bases of that power the links between external strategy and economic performance can be classified as fiscal macroeconomic effects structural microeconomic and structural effects and protectionist effects on foreign economic policy the case of prewar japan suggests that for countries at an intermediate position in the international power hierarchy and in the international division of labor the positive effects of external ambition on economic performance may dominate other cases national socialist germany contemporary developing countries and the postwar superpowers seem to confirm that international position is a principal determinant of these effects

causality between export growth and industrial development empirial evidence from the nics abstract this paper investigates the causal relationship between export growth and industrial development in eight newly industrializing countries nics results of sims causality test show that for most of the nics there is a strong bidirectional causality between the growth of exports and industrial development these findings support the export led growth strategy in that expansion in exports not only promote the growth of national income but also lead to structural transformation of the developing countries

rocks hard places and the new protectionism textile trade policy choices in the united states and japan why have advanced industrial countries responded with different types of protectionist policy to postwar international competition and the resulting societal pressure for state action in contrast to the across the board tariff wars of the 1930s postwar protectionism is a patchwork of tariffs unilateral and nonunilateral quotas administrative restrictions state subsidies and production cartels arguments based on international economic structure international regimes statist approaches and domestic structure all appear to have difficulty in accounting for divergent trade policy choices this article introduces a more nuanced identification and integration of the international and domestic sources of the new protectionism an examination of textile trade policy in the united states and japan reveals that when state policymakers face conflicting international constraints and domestic pressure over the use of overt types of protectionist policy the greater the domestic pressure the more overt the policy response

from normalcy to new deal industrial structure party competition and american public policy in the great depression industrial partisan preference may be formally modeled as the joint consequence of pressures from labor and the differential impact of the world economy on particular businesses this basic and static model when extended to cover the money market can be used to examine questions of political development including the effects of fluctuations in national income on political coalitions american institutions and public policy during the new deal are used to test the theory against empirical evidence much of it from new primary sources the rise of the new deal coalition is traced to changes in the american industrial structure deriving from the boom of the 1920s and the reversal of the u s financial position that resulted from world war i in addition to the well known labor militancy of the 1930s the effect of these changes was the rise of a democratic political coalition dominated by capital intensive multinationally dominant firms and industries with a strong interest in free trade and a historically unprecedented ability to cope with major industrial upheavals without resort to force the major public policy initiatives of the new deal are reexamined from this standpoint

the international economy as a constraint on u s macroeconomic policymaking international economic factors increasingly influence american trade and exchange policy and interdependence also circumscribes the autonomous choice of domestic policies but the growing concern of organization for economic cooperation and development oecd policymakers over the potential for macroeconomic policy coordination to enhance national as well as world welfare implies that international economic relations present opportunities rather than constraints under some circumstances this suggests that understanding domestic economic policy choice within its international context involves not only how policy choices are made within the bounds of international constraints but also when countries might cooperate to modify the constraints themselves this research looks to four important historical cases for information on these questions the first three are the series of cumulating crises in the international monetary system during the 1960s and early 1970s the fourth is the energy supply shock of 1973 and the recession that followed the article describes the process of policy selection in each of these cases contrasting domestic versus international premises for policy choice the economics literature has emphasized the magnitude of domestic welfare gains available from coordinated national economic policies although the cases considered here do not contradict the importance of payoffs they underline the corresponding role of political economic and strategic uncertainty in conditioning elites policy choices

when to make proprietary software open source abstract software can be distributed closed source proprietary or open source developed collaboratively while a firm cannot sell open source software and so loses potential sales revenue the open source software development process can have a substantial positive impact on the quality of a software its diffusion and consequently the demand for a complementary product from which the firm does profit previous papers have considered the firm s option to release software under a closed or open source license as a simple once and for all binary choice we extend this research by allowing for the possibility of keeping software proprietary for some optimally determined finite time period before making it open source furthermore we study the impact of switching costs we show that in case of high in house r d costs the firm always makes the software open source at some point unless switching itself is too expensive the timing however depends on the initial software quality on the other hand when r d is inexpensive the firm opens the source code only when the initial level of software quality is low for intermediate r d costs the firm might have the choice between opening the code immediately opening it at some subsequent and optimally determined time or keeping it closed forever finally we find that whereas high switching costs might prevent firms from adopting an open source business model low switching costs mainly affect the timing of the opening of the source code

the optimal carbon sequestration in agricultural soils do the dynamics of the physical process matter the kyoto protocol which came into force in february 2005 allows countries to resort to supplementary activities consisting particularly in carbon sequestration in agricultural soils existing papers studying the optimal carbon sequestration recognize the importance of the temporality of sequestration but overlook the fact that it is an asymmetric dynamic process this paper takes explicitly into account the temporality of sequestration its first contribution lies in the modelling of the asymmetry of the sequestration de sequestration process at a micro level and of its consequences at a macro level its second contribution is empirical we compute numerically the optimal path of sequestration de sequestration for specific damage and cost functions and a calibration that mimics roughly the world conditions we show that with these assumptions sequestration must be permanent and that the error made when sequestration is supposed immediate can be very significant

explaining choice of development strategies suggestions from mexico 1970 1982 economic development requires choices among a broad spectrum of alternative strategies and as the recent experience of mexico suggests those choices are not easy a complex politics is involved in the transition from one development strategy to another the international political economy and domestic social coalitions both influence the costs and benefits associated with various development policies they rule out some choices but numerous options still remain how can one explain actual outcomes observers may significantly increase their ability to explain outcomes by incorporating a statist component into their analyses within the very broad parameters set by the international political economy the state influences but does not determine the creation and the demands of the social coalition itself in addition the state may use policy instruments and advantages from the domestic and international arenas to implement policy even in the face of domestic opposition the structure of the domestic political economy determines the space within which the statist perspective contributes to explanatory power eventually it is in a historically based ideology that the chief explanation for the state s choice of policy and the construction of particular domestic coalitions is to be found

anticipated devaluations currency flight and direct trade controls in a monetary economy mendation for a country facing a balance of payments deficit this advice is often resisted by country governments instead direct trade controls such as tariffs quotas and subsidies are frequently used in this paper i propose an economic explanation for the reluctance to devalue and the use of trade controls namely the currency flight that can be expected to occur if the devaluation is anticipated in an effort to avoid or offset the effects of this currency flight countries may use direct controls i shall analyze the properties of using import tariffs and export subsidies with or without an anticipated devaluation to affect the balance of payments and obtain the social optimum

breaking with orthodoxy the politics of economic policy responses to the depression of the 1930s under the same systemic shock the collapse of the international economy in 1929 different countries formulated different policy responses britain germany the united states france and sweden all began by attempting the orthodoxy of deflation soon after they abandoned deflation devalued their currencies erected tariff barriers and set up corporatistic production and marketing arrangements a few countries went further and began experimenting with demand stimulus fiscal policy the most successful was nazi germany the swedish and u s efforts were much more limited and less effective the french attempt crumbled in less than a year and britain never tried demand stimulus why this divergence in policy the politics of policy response the societal basis of different policy coalitions and the way in which they were expressed through different political formulations suggests an answer in all countries labor agriculture and certain elements of business became available for revolts against policy orthodoxy what differed across countries was the specific balance of forces among these interest groups and the political factors that shaped their combinations the effect of political leadership institutions and other variables on outcomes depended critically on the way specific social forces in each society used and worked through them