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

external economies and international trade redux comment recently in this journal grossman and rossi hansberg 2010 proposed a novel way to think about the implications of international trade in the presence of national external economies at the industry level instead of perfect competition and two industries grh assume bertrand competition and a continuum of industries grh conclude that the equilibrium is unique if transport costs are low that there is no trade for high transport costs and that there is no equilibrium in pure strategies when transport costs are intermediate in this note we reexamine the equilibrium analysis

1 000 cash back the pass through of auto manufacturer promotions automobile manufacturers frequently use promotions involving cash incentives while payments are nominally directed to either customers or dealers the ultimate beneficiary of the promotion depends on the outcome of price negotiation we use program evaluation methods to compare the incidence of these two types of promotions customers obtain 70 to 90 percent of a customer rebate but only 30 to 40 percent of a dealer discount promotion a 500 difference for a typical promotion our leading hypothesis is that pass through rates differ because of information asymmetries customer rebates are well publicized to customers while dealer discount promotions are not

interconnectivity of communications networks and international trade in this study a multi country model of trade is developed that captures the role of country specific communications network interconnectivity which enhances trade in intermediate business services the number of countries connected to inter nationally interconnected networks is found to determine the structure of comparative advantage that is countries with interconnected networks have a comparative advan tage in the good that requires business services provided via networks in connected countries producers of that good benefit from the efficient transmission of business services this research also demonstrates that countries whose country specific net works are not connected to the interconnected networks may become worse off as the

equilibrium in auctions with entry the authors model entry incentives in auctions with risk neutral bidders and characterize a symmetric equilibrium in which the number of entrants is stochastic the presence of too many potential bidders raises coordination costs that detract from welfare the authors show that the seller and society can benefit from policies that reduce market thickness i e the relative abundance of buyers their analysis extends well known revenue equivalence and ranking theorems but also demonstrates that variations in the auction environment affect optimal policies e g reservation prices in ways not anticipated by models that ignore entry copyright 1994 by american economic association

trade demand spillovers and industrialization the emerging global middle class in perspective in this paper we investigate international demand spillovers brought about by a global middle class and their impact on trade patterns and industrialization we propose a multi industry and two country trade model featuring demand complementarities propagating increasing returns across industries and national boundaries we show how the international extent of demand spillovers depends upon asymmetries in domestic income distribution labor efficiency and labor force size that is on the global distribution of real income

on the simple economics of advertising marketing and product design we propose a framework for analyzing transformations of demand such transformations frequently stem from changes in the dispersion of consumers valuations which lead to rotations of the demand curve in many settings profits are a u shaped function of dispersion high dispersion is complemented by niche production and low dispersion is complemented by mass market supply we investigate numerous applications including product design advertising marketing and sales advice and the construction of quality differentiated product lines we also suggest a new taxonomy of advertising distinguishing between hype which shifts demand and real information which rotates demand

is the linkage principle valid evidence from the field we present field evidence involving experienced bidders tha t supports the linkage principle specifically the prediction that in affiliat ed values auction environments the expected revenues generated at open outcry ascending bid english auctions are higher than those under other auction formats that reveal less information to participants using field data from a large seller of automobiles whi ch experimented with different selling formats we find that the seller s average r evenues were significantly higher under an english auction than under a dynamic internet auction that revealed far less information to bidders 1 introduction and motivation in an influential and classic paper milgrom and weber 1982 derived a powerful result and coined the term linkage principle to describe it simply put in auction environments having affiliated values the linkage principle state s that a seller can expect to increase revenues by providing more information to bidders both before and during the auction an implication of the linkage principle is that open outcry ascending price auctions often referred to as english auctions will on average earn more revenue for the seller than sealed bid auctions under which no information is released or similar auction formats that reveal less information to pot ential buyers according to perry and reny 1999 the linkage principle has come to be considered one of the fundamental lessons provided by auction theory well known exceptions to the linkage principle exist for example within independent private values environments the celebrated revenue equivalence theorem first outlined by vickrey 1961 1962 and then proven by riley and samuelson 1981 as well as myerson 1981 states that any auction format that has the same probability of assigning a winning bidder generates the same expected revenue to the seller in particular the revenue equivalence theorem predicts that the expected revenues earned by the seller at sealed bid auctions will be the same as those earned at english auctions at least when the distribution from which the values are drawn is the same for all potential buyers who are also risk neutral thus the presence of some degree of dependence or a common value component in the signals of potential buyers is critical to the validity of the linkage princi ple the affiliated values model is a generalization of the common value model developed by wilson 1977 under affiliation the conditional expectation of any monotonic function of the signals of all bidders is an increasing function of any individual bidder s own signal when the signals of bidders are dependent in this manner information released by the seller or information the seller provides concerning the bids made by other participants by virtue of the seller s choice of auction format helps bidders refine their beliefs concer ning the true value of the object for sale which in turn induces them to bid more aggressively than they would in the absence of such information while one can imagine circumstances under which the release of information could adversely affect the outcome at an auction for example if the seller released information concerning problems with the object for sale or when low bids by some bidders convince other bidders that the item is worth less than they originally thought the remarkable feature of the linkage principle i s that ex ante providing more information raises the expected revenues to the seller milgrom and weber 1982 have summarized the implications of the linkage principle succinctly honesty is the best policy

auctions with a stochastic number of bidders abstract auction theory is generalized by allowing the number of bidders to be stochastic in a first price sealed bid auction with bidders having constant absolute risk aversion the expected selling price is higher when the bidders do not know how many other bidders there are than when they do know this thus the seller should conceal the number of bidders if he can moreover a bidder s ex ante expected utility is the same whether or not there is a policy of concealing the number of bidders concealment therefore pareto dominates announcement with risk neutral bidders the optimal auction is the same whether or not the bidders know who their competitors are

information and subsidies complements or substitutes abstract does providing information about a product influence the impact of price subsidies on purchases this question is particularly relevant for health products in developing countries where both informational campaigns and price subsidies are common policy instruments we conduct a field experiment in zambia and find that providing information about a new version of a product significantly increases the impact of price subsidies on take up taken alone the information manipulation has no significant impact on demand while the price subsidy substantially increases demand however the evaluation of either intervention in isolation fails to capture the significant complementarity between the two

clusters and comparative advantage implications for industrial policy abstract cases of industrial agglomeration or clusters arise in the presence of industry specific and local externalities also called marshallian externalities the standard argument is that such externalities may justify a policy of infant industry protection to allow and encourage clusters to emerge in this paper i explore this carefully and show that different policy implications emerge under a more realistic modeling of clusters in particular rather than distorting prices to promote clusters in advanced sectors that may exhibit strong clustering possibilities countries should focus instead on promoting clustering in current sectors which have revealed to have the strongest comparative advantage import substitution is not a proper way to achieve this

efficiency in auctions with private and common values an experimental study this discussion has resulted in a publication in the american economic review 2002 92 3 625 43 auctions are generally not efficient when the object s expected value depends on private and common value information we report a series of first price auction experiments to measure the degree of inefficiency that occurs with financially motivated bidders while some subjects fall prey to the winner s curse they weigh their private and common value information in roughly the same manner as rational bidders with observed efficiencies close to predicted levels increased competition and reduced uncertainty about the common value positively affect revenues and efficiency the public release of information about the common value also raises efficiency although less than predicted

the role of information in medical markets an analysis of publicly reported outcomes in cardiac surgery during the past two decades several public and private organizations have initiated programs to report publicly on the quality of medical care provided by specific hospitals and physicians these programs have sparked broad debate among economists and policy makers concerning whether and to what extent they have improved or harmed medical productivity we take advantage of a cross sectional time series of different hospitals to address two fundamental questions about quality reporting first we examine whether report cards affect the distribution of patients across hospitals second we determine whether report cards lead to improved medical quality among hospitals identified as particularly bad or good performers our data are from the longest standing effort to measure and report health care quality the cardiac surgery reporting system csrs in new york state using data for 1991 through 1999 we find that csrs affected both the volume of cases and future quality at hospitals identified as poor performers poor performing hospitals lost relatively healthy patients to competing facilities and experienced subsequent improvements in their performance as measured by risk adjusted mortality this abstract was borrowed from another version of this item

trade patterns and gains from trade with an intermediate good produced under increasing returns to scale abstract this paper considers a model with one primary factor one intermediate good and two final goods increasing returns to scale are introduced into the production of the intermediate good to analyze trade patterns and gains from trade with two assumptions about the market structure of the intermediate good average cost pricing and monopoly free trade does not necessarily lead to gains for the economy and either specialization or multiple equilibria are obtained this paper also provides interesting comparisons between the types of market structure showing for example that monopoly can be preferred to average cost pricing

the harris todaro model and economies of scale the authors attempt to reanalyze the harris todaro migration model in the presence of economies of scale in the manufacturing sector focusing on economies of scale that are external to a given firm but internal to the industry annotation

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

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

sorting in the used car market after the volkswagen emission scandal the disclosure of the vw emission manipulation scandal caused a quasi experimental market shock in the observable quality of vw diesel vehicles we consider a classical model for adverse selection and sorting to derive an empirically testable hypothesis about the impact of observable quality on the supply of used cars we test the hypothesis with data collected from an online car selling platform which reflects about 50 of the german used car market the empirical approach is based on a conditional difference in differences method we find that the supply of used vw diesel vehicles increases after the vw emission scandal this finding is consistent with the predictions of the theoretical model furthermore we find the positive supply effects increase with the probability of manipulation

5 information impact and allocation rules in auctions with affiliated private values a laboratory study in affiliated private value auctions each bidder has perfect information regarding his her own value for the object at auction but higher values of the item for one bidder make higher values for other bidders more likely we report on a series of experiments examining three key implications of these auctions i in a first price auction public information about rivals values increases expected revenue ii an english auction increases expected revenue compared to a first price auction and iii a second price auction is isomorphic to an english auction in examining these issues we compare predictions of some ad hoc bidding models with nash equilibrium predictions in the first price auction experiments nash equilibrium bidding theory organizes the data better than either of two ad hoc bidding models public information about others valuations does increase average revenue but the increase in revenue is smaller and less reliable than predicted under risk neutral nash equilibrium bidding lower average revenue might be attributed to risk aversion while the high variability is attributed to a sizable frequency of individual bidding errors relative to the theory bidding theory precisely organizes english auction outcomes after a brief initial learning period the dominant strategy equilibrium does not organize second price auctions nearly as well as market prices persistently exceed predicted prices the difference between english and second price outcomes is attributed to effects of different information flows inherent in the structure of the two institutions on eliminating bidding errors revenue impacts of these two institutions relative to a first price auction are examined in light of observed bidding patterns

global models applied to agricultural and trade policies a review and assessment the continuing process of global integration bears implications for farmers and related supplying and processing industries in all parts of the world but also for the rest of the world economy an assessment of agricultural and trade policy impacts is bound to be complex and is often supported by quantitative modeling analysis this article provides an assessment of the present state of applied modelling in the area of trade and agricultural policies we provide in this paper a comparative assessment of alternative modelling approaches considering a total of 16 partial equilibrium and general equilibrium models the assessment includes theoretical modelling foundations datasets employed and institutional aspects such as model maintenance and dissemination of results a typology of models is provided by structuring the assessment along a clear set of evaluation criteria

the value of public information in monopoly the logic of the linkage principle of milgrom and weber 1982 extends to price discrimination a non linear pricing monopolist who sells to a single buyer always prefers to commit to publicly reveal information a liated to the valuation of the buyer

information disclosure as a matching mechanism theory and evidence from a field experiment market outcomes depend on the quality of information available to its participants we measure the effect of information disclosure on market outcomes using a large scale field experiment that randomly discloses quality information in wholesale automobile auctions we argue that buyers in this market are horizontally differentiated across cars that are vertically ranked by quality this implies that information disclosure helps match heterogeneous buyers to cars of varying quality causing both good and bad news to increase competition and revenues the data confirm these hypotheses these findings have implications for the design of other markets including e commerce procurement auctions and labor markets jel c93 d44 d82 l15

multi objective models for lot sizing with supplier selection abstract in this paper two multi objective mixed integer non linear models are developed for multi period lot sizing problems involving multiple products and multiple suppliers each model is constructed on the basis of three objective functions cost quality and service level and a set of constraints the total costs consist of purchasing ordering holding and backordering and transportation costs ordering cost is seen as an ordering frequency dependent function whereas total quality and service level are seen as time dependent functions the first model represents this problem in situations where shortage is not allowed while in the second model all the demand during the stock out period is backordered considering the complexity of these models on the one hand and the ability of genetic algorithms to obtain a set of pareto optimal solutions we apply a genetic algorithm in an innovative approach to solve the models comparison results indicate that in a backordering situation buyers are better able to optimize their objectives compared to situations where there is no shortage if we take ordering frequency into account the total costs are reduced significantly

peripherality in economic geography and modern growth theory evidence from ireland s adjustment to free trade in light of the ambiguous convergence experience of peripheral regions in the eu and in the post war world economy this paper studies the implications of some recent trend models that do not predict convergence as a necessary outcome of market integration these models are then confronted with data on the irish experience under free trade the irish case is arguably of general interest because it has served as one of the longest running examples of the type of outward oriented strategies recommended for developing countries by international institutions such as world bank and the imf the purpose of the paper is twofold to identify lacunae in the recent theoretical analyses and to develop further insights into the structural transformation of a peripheral economy this abstract was borrowed from another version of this item

the effect of information on product quality evidence from restaurant hygiene grade cards this study examines the effect of an increase in product quality information to consumers on e rms choices of product quality in 1998 los angeles county introduced hygiene quality grade cards to be displayed in restaurant windows we show that the grade cards cause i restaurant health inspection scores to increase ii consumer demand to become sensitive to changes in restaurants hygiene quality and iii the number of foodborne illness hospitalizations to decrease we also provide evidence that this improvement in health outcomes is not fully explained by consumers substituting from poor hygiene restaurants to good hygiene restaurants these results imply that the grade cards cause restaurants to make hygiene quality improvements

managerial versus production wages offshoring country size and endowments we explore the role of trade in differentiated final goods as well as offshoring of tasks for inequality both within and between countries emphasizing the distinction between managerial and production labour we extend grossman and rossi hansberg 2012 where task trade is driven by external economies of scale by considering asymmetric endowments identifying possible equilibrium patterns of task trade we find little scope for two way trade if endowments are asymmetric our numerical simulations identify non monotonicities between the level of offshoring and measures of within country as well as between country inequality remunerations des gestionnaires et des travailleurs delocalisation taille du pays et dotation de facteurs on explore le role du commerce de biens differenciees finaux ainsi que celui de la delocalisation des t ches dans l explication de l inegalite a la fois intra et entre pays en mettant l accent sur la distinction entre travail de gestion et travail de production on developpe le modele de grossman et rossi hansberg 2012 ou le deplacement des t ches est enclenche par les economies d echelle externes en considerant les dotations asymetriques de facteurs en identifiant les patterns d equilibres possibles du deplacement des t ches on trouve peu de possibilite pour un commerce bilateral si les dotations sont asymetriques des simulations numeriques identifient des relations non monotones entre le niveau de delocalisation et des mesures d inegalites intra pays ou entre pays

on the failure of the linkage principle in multi unit auctions it is shown that the linkage principle milgrom and weber 1982 does not extend to the multi unit auction setting an analysis of the equilibium bidding strategies is carried out for the general two agent two unit vickrey auction in order to provide economic insight into the nature of the failure in addition an explicit counterexample is provided both authors acknowledge support from the binational science foudation grant 9500023 1 reny also acknowledges support from the national science foundation grant sbr 970932 and the university of pittsburgh s faculty of arts and sciences

an empirical analysis of term premiums using significance tests for stochastic dominance abstract the economic significance of term premiums in real returns on us treasury bills is examined using recently developed tests for first and second order stochastic dominance the tests place only general restrictions on the preferences of individuals and on the distribution of returns the results indicate that the two month real return is preferred to the one month real return based on both dominance criteria other term premiums do not appear to be economically significant

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

6 revenue effects and information processing in english common value auctions an experiment analyzing behavior in english common value auctions is reported english auctions raise more revenue than first price auctions only when bidders do not suffer from a strong winner s curse agents employ other bidders dropout prices along with their private information as nash bidding theory predicts however a simple and natural signal averaging rule which does not require recognizing the adverse selection effect of winning the auction better characterizes the data than the nash rule monte carlo simulations using fiml estimates of the signal averaging rule predict a number of data characteristics not directly employed in the estimation procedure copyright 1996 by american economic association

policy designs in a dynamic model of infant industry protection abstract this paper takes the neoclassical infant industry model allows agents to respond to future expectations and reveals previously unexplained relationships between protection and outcome policy which projects to protect the industry until international competitiveness may not necessarily succeed consistent to the mixed empirical evaluations to guarantee success protection has to last longer however for success to be an equilibrium protection can last shorter decline after take off is also an equilibrium when adjustment speed is bounded increasing the protection rate is not isomorphic to decreasing its duration in policy design adjustment speed critical industry scale and policy duration are all relevant

bayesian learning in an infant industry model abstract most analyses of the infant industry argument assume that production early on benefits subsequent production in deterministic fashion this paper presents an alternative framework for evaluating the infant industry argument that focuses on imperfect information as a barrier to entry initial entrants provide information of social value by reducing uncertainty for potential followers about the suitability of local conditions in contrast to earlier work i show that factors that increase the informational barrier to entry may lower the optimal subsidy to the infant industry and that the standard test of the success of infant industry policy is not always valid 1997 elsevier science b v

coalition formation in standard setting alliances we present a theory for predicting how business firms form alliances to develop and sponsor technical standards our basic assumptions are that the utility of a firm for joining a particular standard setting alliance increases with the size of the alliance and decreases with the presence of rivals in the alliance especially close rivals the predicted alliance configurations are simply the nash equilibria i e those sets of alliances for which no single firm has an incentive to switch to another alliance we illustrate our theory by estimating the choices of nine computer companies to join one of two alliances sponsoring competing unix operating system standards in 1988

asymmetric information adverse selection and online disclosure the case of ebay motors since the pioneering work of akerlof 1970 economists have been aware of the adverse selection problem that information asymmetries can create in used goods markets the remarkable growth in online auctions of used goods where buyers generally purchase sight unseen therefore poses a puzzle i argue that given a means for credible information disclosure sellers will voluntarily disclose their private information to buyers through online media this limits information asymmetries and adverse selection to test this theory i examine the role of information in a large online used car market ebay motors i nd that sellers selectively disclose information that information asymmetries are reduced by these disclosures and that online media such as photos text and graphics provide a rich environment for information disclosure

international trade with a public intermediate good abstract the purpose of this paper is to investigate familiar trade theorems such as the stolper samuelson samuelson rybczynski heckscher ohlin and factor price equalization theorems when a public intermediate good is accommodated in the 2 2 general equilibrium trade model the public good which is introduced by the lindahl pricing rule is assumed to be of a semipublic kind then we present the circumstances where the positive results for all of the above theorems except the factor price equalization theorem hold as for factor price equalization we show that there is a tendency for trade to equalize prices

price discontinuities in an online market for used cars we study the price setting behavior in a competitive market for used cars and provide empirical evidence for coarse information processing based on detailed field data from one of europe s largest online marketplaces for automotive vehicles we document systematic and sizable price discontinuities at salient car age and mileage thresholds the price difference between two otherwise identical cars across registration years where one was first registered in january and the other in december of the previous year is up to five times larger than that between two cars first registered in any two subsequent months within a registration year a similar pattern can be observed in the mileage dimension at 10 000 km odometer marks which is in line with earlier findings in the literature being able to study discontinuities along two dimensions of the same good allows us to further our understanding toward a more general notion of inattentive behavior while our results are compatible with a behavioral model of l

procompetitive gains from trade and comparative advantage having made the concepts of pro or anticompetitive output changes precise necessary and sufficient conditions for trade gains are derived under conditions of increasing returns to scale and imperfect competition in a general equilibrium model with any finite number of goods and factors these conditions yield generalizations of the theorems of comparative advantage in goods and implicit factor trade the factor content version of the h o theorem other generalizations can be obtained if one assumes quasihomothetic preferences and that welfare effects are dominated by price rather than income effects copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

increasing returns and the specific factors model in recent years trade theorists have been increasingly interested in the role of economies of scale in international trade models yet the literature to date seems to lack a simple treatment of income distribution and related issues in the presence of economies of scale the present paper attempts to fill this gap by incorporating increasing returns to scale irs into the standard specific factors model trade theorists have begun to view the specific factors model as the favored vehicle for analyzing the economy wide effects of changes in commodity prices factor endowments and other exogenous variables the strongest case in favor of this model has been presented by neary 16 who argues that the model provides a rigorous general equilibrium foundation for partial equilibrium analysis as far as the supply side of the economy is concerned whereas with icm partial equilibrium reasoning will frequently be misleading 2 he further conjectures that icm is the source of all the paradoxes which are peculiar to international trade theory with the exception of those which arise from the failure to adopt first best policies in light of these views in the literature it is of interest to investigate how robust the predictions of the specific factors model are in the presence of economies of scale the analysis in this paper has important implications for the literature on irs as well as that on the specific factors model the more important of these implications may be summarized as follows first in a small open economy characterized by national intraindustry irs the condition for local dynamic stability is equivalent to the condition for a normal output price response 3 moreover in contrast with the findings of the irs models based on free intersectoral mobility of all factors as exemplified in herberg and kemp 6 this condition may be satisfied everywhere along the production possibilities frontier second stability of an equilibrium in the presence of irs is not sufficient to guarantee the validity of many results of the standard specific factors model responses of a small

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

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

issues of strategic trade policy for small countries three game theoretic issues of international trade and commercial policy are examined fro m the special perspective of small countries in oligopolistic market s the question is when their ability to remain credibly small player s can be an advantage in negotiations about trade regimes small cou ntries gains from various kinds of trade are analyzed and their abi lity to achieve a better outcome by being more patient is considered the formation of alliances is briefly examined where small countrie s can gain if they can become free riders or pivotal voters copyright 1987 by the editors of the scandinavian journal of economics

marshallian stability and long run equilibrium in the theory of international trade with factor market distortions and variable returns to scale abstract we show that perverse comparative statistics paradoxes associated with factor market distortions and variable returns to scale vanish if the equilibrium is marshallian stable and that the equilibrium is marshallian stable iff it is a stable long run equilibrium

strategic exclusion of the highest valued bidders in wholesale automobile auctions by restricting bidders to be qualified dealers wholesale automobile auctions exclude the bidders who place the highest value on the vehicles consumers this article provides an explanation for this puzzling entry restriction by modeling the inventory management decisions of a firm if an automobile dealer has more vehicles in inventory than is optimal it cannot reduce its inventory by selling directly to consumers without impacting the demand for the automobiles that remain however if the dealer sells his her excess inventory to a competitor the demand for his her remaining vehicles increases as the competitor responds by acquiring fewer additional vehicles we demonstrate that for any market demand function and any cost of the competitor acquiring additional vehicles a dealer with excess inventory does better by selling a subset of its vehicles to a competitor rather than directly to consumers we discuss the market for wholesale automobiles in relation to other markets where goods are also auctioned but where entry is not restricted to qualified dealers doing so allows us to compare our inventory management explanation to common explanations provided by industry practitioners we find that intuitive alternative stories do not consistently explain practices across markets jel d44 l11 l62 i introduction sellers rarely take steps to exclude buyers from the opportunity to purchase even in special cases where entry restrictions are observed sellers rarely exclude those buyers who place the highest value on the goods for sale we present one market where this exact type of entry restriction is common and provide a simple rationale in particular this article considers the wholesale market for automobiles where most automobiles are sold in auctions and the majority of automobile auction houses restrict entry such that only licensed automobile dealers are allowed to bid and consumers are expressly excluded 1 to explain why automobile auctions are closed to consumers we argue that entry restrictions are a strategic response to the structure of the market for automobiles because of fluctuations in the arrival of trade in vehicles some dealers in some periods have more vehicles than they find it profitable to sell in that period as a result these dealers are willing to participate in dealer only auctions because these exclusionary auctions allow dealers to reduce their inventory without cannibalizing demand in the secondary market we consider this type of entry restrictions to be especially puzzling because a market exists for consumers to pay dealers to get them into automobile auctions see www dealerlicensepros com who say that potential dealers need a license so that they can get into dealer only auctions to maximize profits as a result these entry restrictions clearly present a binding constraint because consumers are willing to pay to enter the auction house but are only able to do so illicitly by finding a dealer who is willing to violate the auction rules or by obtaining a dealer s license simply for the purpose of buying a vehicle for their own use further examples include www dealerlicense com who discusses that unlicensed dealers are not being able to buy cars at exclusive dealer only car auctions and numerous online forums where consumers discuss ways to circumvent entry restrictions by paying dealers who will sneak them into an auction for a fee e g see a discussion of fees upwards of 500 for entry to buy a single vehicle ask metafilter com 2 our story is centered around the inventory management decisions of firms in the automobile industry if an automobile dealer has more vehicles in inventory than is optimal it cannot reduce his her inventory by selling directly to consumers without impacting the demand for the automobiles that remain however if the dealer sells his her excess inventory to a competitor the demand for his remaining vehicles increases as the competitor responds by acquiring fewer additional vehicles

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

the impact of public information on bidding in highway procurement auctions a number of papers in the theoretical auction literature show that the release of information regarding the seller s valuation of an item can cause bidders to bid more aggressively this widely accepted result in auction theory remains largely untested in the empirical literature recent theoretical work has also shown that this effect can be more pronounced in auctions with larger common cost uncertainty we examine the impact of a policy change by the oklahoma department of transportation that led to the release of the state s internal estimate of the costs to complete highway construction projects we perform a differences in differences analysis comparing bidding in texas a state that had a uniform policy of revealing the same information all throughout the period of analysis to bidding in oklahoma our results show that in comparison to texas auctions the average bid in oklahoma fell after the change in engineers cost estimate ece policy this decline in bids was even larger for projects where the common uncertainty in costs is greater moreover the within auction standard deviation of bids fell after the change in ece policy with the most significant decline observed again in projects with greater common cost uncertainty

fat tax subsidy or both the role of information and children s pester power in food choice abstract using a discrete choice experiment with real economic incentives this paper studies how food fiscal policies and external influences such as pestering and information can affect parental choice of food for their child using pairs of a parent and child the experimental design varies the food prices of healthier and unhealthier alternatives of food products for children as part of specific food fiscal policies we then examine the interplay of children s pester power as well as information about the fiscal policies the results from our lab experiment suggest that a implementing a fat tax and a subsidy simultaneously can shift parental behavior to healthier food products to a greater degree than a fat tax or a subsidy alone b providing information regarding the food fiscal policies can further increase the impact of the intervention and c child pestering is one of the causes of the moderate effectiveness of the policies as it strongly affects parents in making unhealthier choices

a simple dynamic model of uneven development and overtaking this paper extends the brezis et al 1993 ricardian leapfrogging model by introducing geographically mobile capital and allowing for a wider variety of development patterns in a two region economy localised learning by doing causes specialisation and uneven development technological change reverses the existing development pattern if the new technology locates in the low wage region however the development pattern may also be reinforced if spillovers between the old and the new technology make the leading region a more attractive location capital flows are explicitly analysed and it is furthermore shown that inter regional transfers may reduce the chance of take off

global models of trade in agriculture and related environmental modelling a review and assessment the continuing process of global integration bears implications for farmers and related supplying and processing industries in all parts of the world but also for the rest of the world economy an assessment of agricultural and trade policy impacts is bound to be complex and is often supported by quantitative modeling analysis this article provides an assessment of the present state of applied modelling in the area of trade and agricultural policies we provide in this paper a comparative assessment of alternative modelling approaches considering a total of 16 partial equilibrium and general equilibrium models the assessment includes theoretical modelling foundations datasets employed and institutional aspects such as model maintenance and dissemination of results a typology of models is provided by structuring the assessment along a clear set of evaluation criteria

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