elimination of west european coal subsidies implications for coal production and coal imports expanding volumes of international coal supply can be secured in west european harbours at us 50 60 1993 per tonne in 1993 western europe produced 160 million tonnes of coal but the cost was f

why voluntary export restraints are voluntary the paper presents an analysis of the effect upon an oligopolistic equilibrium of introducing a voluntary export restraint ver upon an importing firm a ver set at the free trade level of imports is shown to raise the profits of all firms within the industry the result follows as the imposition of a ver upon a free trade nash price competition forces the domestic firm to become an industry price leader the ver raises industry prices by facilitating collusion and lowers consumer welfare pourquoi les restrictions volontaires d 1 exportation sont volontaires ce memoire presente une analyse des effets de l introduction de restrictions volontaires a l exportation rve sur une entreprise qui importe dans un monde en equilibre oligopolistique on montre que l introduction de rve approximant le niveau des importations en regime de libre echange devrait augmenter les profits de toutes les entreprises dans l industrie cela decoule du fait que l imposition de rve sur un univers de concurrence par les prix a la nash en regime de libre echange force l entreprise domestique a devenir le leader en prix l introduction de rve augmente le niveau des prix de l industrie en facilitant la collusion et de ce fait reduit le niveau de bien etre des consomrnateurs

the role of knowledge codification in the emergence of consensus under uncertainty empirical analysis and policy implications the aim of the article is to empirically analyse the main factors which allow the emergence of consensus moreover we raise the question of the nature of the codified process involved which seems to be too reducing to promote knowledge flows within the community and therefore to contribute to learning processes and better choices about the future our analysis relies on a prospective investigation based on a delphi type study carried out by beta in 1994

content protection resource allocation and variable labour supply a three sector general equilibrium model is used to study the implications of an increase in content protection under the assumption of variable labor supply the role of variable labor supply is highlighted in the paper an increase in domestic content requirements increases the equilibrium labor supply which magnifies the policy effects on the output levels of agricultural manufacturing and intermediate goods and the imports of foreign intermediates furthermore the policy change may increase the national income of the economy while the national welfare is decreased

quantitative restrictions and the welfare effects of capital inflows abstract this paper explores the welfare effects of capital inflows when some imports are subject to quantitative restrictions it is shown that in a heckscher ohlin model where all imports are restricted by quotas and some fraction of the initial domestic capital stock is foreign owned a capital inflow is welfare improving regardless of the ranking of sectoral factor intensities with sector specific capital stocks and both tariff ridden and quota restricted imports the consequences of direct foreign investment in any sector are uncertain and depend upon whether the two imports are compensated substitutes or complements as well as the characteristics of production

competition in taxes and performance requirements for foreign direct investment abstract tax incentives offered to attract firms engaged in foreign direct investment are often tied to performance requirements such as domestic content restrictions or adherence to environmental standards the tax competition literature has repeatedly shown that competition between municipalities for mobile firms tends to drive taxes to low levels one would expect a comparable result for burdensome performance requirements despite this the evidence suggests that while taxes have indeed been driven down performance requirements are as popular as ever we explain this seeming conundrum by showing that in the presence of spillovers binding performance requirements can act as a coordination device for firms in equilibrium municipalities choose performance requirements which maximize joint surplus from investment competition between municipalities then transfers this surplus to firms via tax subsidies

export performance and export import linkage requirements this paper examines the resource allocation effects of two policies widely employed by developing countries to improve their trade balances compared to free trade both export performance and export import linkage policies may actually worsen the balance of trade unless they are coupled with an import barrier on final goods even with such barriers an export import linkage policy still may not cause the trade balance to improve the effects of both policies on a number of domestic variables are discussed profit and output of domestic exporters can increase under trade performance policies

germany s solar cell promotion dark clouds on the horizon abstract this article demonstrates that the large feed in tariffs currently guaranteed for solar electricity in germany constitute a subsidization regime that threatens to reach a level comparable to that of german hard coal production a notoriously outstanding example of misguided political intervention yet as a consequence of the coexistence of the german renewable energy sources act eeg and the eu emissions trading scheme ets the increased use of renewable energy technologies does not imply any additional emission reductions beyond those already achieved by ets alone similarly disappointing is the net employment balance which is likely to be negative if one takes into account the opportunity cost of this form of solar photovoltaic pv support along the lines of the international energy agency iea 2007 energy policies of iea countries germany 2007 review international energy agency oecd paris p 77 we recommend the immediate and drastic reduction of the magnitude of the feed in tariffs granted for solar based electricity ultimately producing electricity on this basis is among the most expensive greenhouse gas abatement options

regulations regime switches and non monotonicity when non compliance is an option an application to content protection and preference abstract direct regulations have two regimes in one all firms behave in the same manner and in the other they behave differently past work assumed all firms were identical thereby neglecting the non monotonicity in comparative statics arising from the regime change

voluntary export restraints and foreign investment abstract this paper develops a model in which both voluntary export restraints vers and foreign investment can be considered we investigate the welfare effect of additional foreign investment under vers it is demonstrated that if the commodity subject to vers is more intensive in capital in the importing country which is assumed to be a debtor country additional foreign investment into that country raises its welfare

the theory of domestic content protection and content preference this paper investigates the resource reallocation effected by content protection and content preference schemes under alternative assumptions regarding the definition of domestic content the number of intermediate goods and the market structure of the domestic intermediate good industry content protection is shown to be equivalent to a combination of more familiar commercial policies however the extent of application of these policies is determined endogenously by parameters of the production functions for intermediate and final goods a number of anomalous and undesirable outcomes that may result from content protection and content preference are discussed

voluntary import expansions with non stationary demand in this paper the effect of voluntary imports expansions vies on welfare in a dynamic game is analysed it is found that 1 there exists a markov perfect nash equilibrium mpne and a unique stable steady state 2 with habit formation in consumption the welfare and output for each firm are higher than that without habit formation and 3 vies can increase an importing country s welfare with raised con sumption and lowered price therefore vies can be voluntary to an importing country

the rise and fall of german hard coal subsidies abstract beginning with the coal crisis of 1958 the survival of the german hard coal mining sector has been heavily dependent on subsidies for several decades these subsidies are a complex system of almost 60 different measures often with conflicting objectives annual financial support for this subsidy system grew from 0 6 billion in 1958 to 7 5 billion in 1989 with the majority of the funding financed outside the public budget by a special fund based on the coal penny kohlepfennig in 1995 the abolishment of the coal penny in connection with budget constraints led to a significant subsidy decrease to 3 5 billion a recent agreement between the federal government and the mining state of north rhine westphalia in 2003 however seems to have fixed german hard coal subsidies at the 2 billion level for the time after 2012

market share quotas abstract anecdotal evidence reveals that an import quota is not always filled when the quota is specified in terms of a market share limit instead of a quantity limit in a simple cournot duopoly we show that imposing a market share quota eliminates pure strategy equilibria instead a mixed strategy equilibrium occurs where the quota is not binding under one of the two equilibrium domestic strategies compared with a tariff that restrains the foreign market share to an equivalent level domestic output and social welfare may be higher under a market share quota

the case of the vanishing revenues auction quotas with oligopoly this paper examines the effects of auctioning quota licenses when monopoly power exists here the sales of licenses will never raise any revenue if domestic and foreign markets are segmented more surprisingly the inability to raise revenue is shown to persist even when arbitrage across markets is possible as long as the quota is not too far from the free trade import level this suggests that existing revenue estimates from auctioning quota licenses which are based on the assumption of competition are upwardly biased it also makes it likely that quotas implemented by auctioning licenses even when set optimally have adverse welfare effects copyright 1990 by american economic association

content protection and transnational monopoly abstract the paper investigates how domestic content requirements imposed on a vertically integrated monopolist affect production and welfare three content schemes are investigated it is shown that a scheme can be formulated which increases the range of intermediate goods as well as the quantity of final good produced this occurs even though the firms production costs are invariably increased by content protection the scheme can also increase domestic welfare

trade policy subtleties with multinational firms abstract regional trade blocks must specify domestic content rules that define the conditions under which a good qualifies as domestic and so may be freely traded within the block this paper analyzes such rules focussing on oligopolistic industries in which foreign multinationals rely much more on imported intermediate inputs that do domestic firms in such a situation we argue that domestic content provisions are anti competitive reducing overall final output of the industry and shifting rents to domestic firms these ideas are examined analytically and then numerically using an applied general equilibrium model of the north american auto industry

is the wto passe the wto has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements ptas should economists see this as an efficient institutional hand off where the wto has carried trade liberalization as far as it can manage and is now passing the baton to ptas to finish the job this paper surveys a growing economics literature on international trade agreements and argues on this basis that the wto is not passe rather and subject to some caveats this survey of research to date suggests that the wto warrants strong support while a more cautious view of ptas seems appropriate

constituent interest vs legislator ideology the role of political opportunity cost this paper applies the economic model of legislative voting to the automobile industry domestic content vote in the u s house of representatives in 1982 we consider constituent interests for and against the ml and compare the predictive powers of alternative indicators of ideological preferences we also examine the role of political opportunity cost and find that lame ducks were significantly less likely to vote for the bill than were returnees to congress given the political advantages of voting for the bill this is consistent with the view that legislators were influenced by the case for freer trade

strategic use of recycled content standards under international duopoly abstract we examine the strategic use of recycled content standards rcss under international duopoly rcss require firms supplying the domestic market to use a certain proportion of recycled materials as inputs we demonstrate that when there is no trade in recycled materials two identical countries both set strategically stricter or laxer rcss however when there is trade in recycled materials it may be the case that one country sets a stricter rcs while the other sets a laxer rcs when a world supply constraint on recycled materials is not binding the main source of the asymmetric distortion in rcss is a demand effect for recycled materials

content protection and tariffs under monopoly and competition abstract this paper compares the relative efficiency of local content schemes and tariffs as alternative means of achieving certain non economic distributional objectives the efficiency comparison is made under the alternative assumptions that an intermediate good component is produced a competitively and b by a single firm the paper shows how the ranking of tariffs and content schemes i is sensitive to these assumptions and ii depends on the local content ratio and the elasticity of demand for components the possible implications of vertical integration in the production process and rent revenue seeking behaviour are also considered insofar as they affect the ranking of policies

maintaining and testing separability in demand systems we derive a general elasticity representation of the necessary and sufficient conditions for direct weak separability of the utility function parametric restrictions required to implement the separability conditions are presented for three common demand systems the almost ideal translog and rotterdam our empirical application uses the rotterdam model to test a few separable structures within a complete u s demand system emphasizing food commodities results based on size corrected likelihood ratio tests provide support for commonly used separability assumptions about food and meat demand

welfare gains from capital inflows under import quotas abstract the presence of tariffs was assumed in the literature which examined the effect of additional foreign investment on the welfare of the host country in the small country setting however this paper analyzes the case of import quotas and shows that additional inflows of foreign capital improve the host country s welfare when import quotas are kept constant

evaluating environmental programs the perspective of modern evaluation research large scale environmental programs generally commit substantial societal resources making the evaluation of their actual effects on the relevant outcomes imperative as the example of the subsidization of energy saving appliances illustrates much of the applied environmental economics literature has yet to confront the problem of proper attribution of effects to underlying causes on a convincing methodological basis this paper argues that recent results in the econometrics and statistics literature on program evaluation could be utilized to advance considerably in this context in particular the construction of a credible counterfactual situation is at the heart of the formal statistical evaluation problem even when controlled experiments are not a viable option appropriate approaches might succeed where traditional empirical strategies fail to uncover the effects of environmental interventions

trade and efficiency effects of domestic content protection the australian tobacco and cigarette industries this paper provides an empirical investigation into the international trade and domestic market efficiency effects of physical domestic content requirements in the australian tobacco leaf growing and cigarette manufacturing industries the authors empirical evidence suggests that the content requirement has distorted trade by restricting leaf imports nevertheless the data are also consistent with the efficient contract hypothesis the mix of domestic to imported leaf used in cigarette manufacturing depends on domestic leaf production costs and on world leaf prices but not on the negotiated domestic leaf price copyright 1993 by mit press

firm behaviour and market access in a free trade area with rules of origin we study a free trade area with rules of origin and show that there are two distinct regimes comparative statics results for the two regimes are exact opposites and a regime switch occurs when roo become restrictive enough consequently imports into the fta of the intermediate good first fall and then rise while the opposite pattern occurs for imports of the final good and for the price of the domestic input we also show that tighter roo have opposite effects on the well being of final versus intermediate

welfare and market access effects of piecemeal tariff reform abstract we study the link between import volume and welfare due to liberalization we confine our attention to the small country case and to unilateral tariff reductions our results indicate that increased import volume associated with tariff reductions is neither necessary nor sufficient for welfare improvement to occur we show that in general both import value and welfare cannot fall moreover if the excess demand for exported goods does not respond to changes in the prices of imported goods the value of imports and welfare must move in opposite directions

an analysis of import expansion policies an analysis of import expansion policies 1 introduction policy makers appear to display unlimited ingenuity in devising new and ever more complex measures to influence international trade no sooner did the profession come to understand the economics of trade restricting devices such as tariffs quotas and voluntary export restraints vers the discirminatory nature of vers has been recently noted and analyzed in dinopoulos and kreinin 1988 1989 then a new policy instrument was introduced christened by bhagwati 1987 as voluntary import expansion vie in several recent instances the united states insisted that japan voluntarily expand its import of certain products such as semiconductors or beef from the united states while the ver restricts the volume of trade below free market equilibrium the vie would expand the volume of trade beyond the equilibrium level but both policies depart from free trade equilibrium and both are discriminatory in nature a ver that limits japanese auto exports to the u s favors european suppliers who are excluded from the restriction their thems of trade improve and or their volume of export expands a vie that forces the japanese to import a minimum amount of semiconductors from the united states excludes european suppliers a similar vie on beef imports would discriminate against australian and argentinian suppliers it constitutes a form of export protectionism bhagwati and irwin 1987 how might a government administer a vie in the case of semiconductor imports by japan the possibilities are a subsidy by the japanese government on imports from the u s or an instruction to the large chip using companies in japan to purchase more american chips 1 alternatively the japanese government may buy u s chips for its own use or it may favor american suppliers in awarding contracts in the fall of 1987 certain japanese steel companies agreed under miti pressure to expand purchases of american coal even though it costs a7 per ton more than australian coal and in january 1988 1 an instance of a vie in the construction sector came to light japan had been under american pressure to permit u s construction companies to bid on large japanese public works projects like the kansai airport near osaka and the tokyo bay bridge such projects can amount to 70 billion in the next decade in response the japanese government proposed to permit joint foreign japanese companies to bid on these projects and give american companies preferential treatment in forming such partnership this paper analyzes the economic effects of a vie and whenever appropriate compares it to an export subsidy whereas the export subsidy is an instrument used by the exporting country the vie is a policy instrument employed by the importing country section ii presents a comparison between the two instruments within a two country general equilibrium framework when the offer curves are elastic section iii addresses the question of the optimum vie and compares it to the optimum tariff section iv analyzes the case when the offer curve of the vie administering country is enelastic another key distinction between a vie and an export subsidy is that the former is discriminatory between different trading partners while the latter is not section iv incorporates this feature by recasting the analysis in a three country general equilibrium framework section v states the conclusions of the paper ii view versus export subsidy a two country analysis with elastic offer curves in coventional trade geometry an export subsidy assumed as usual to be financed by a lump sum tax is shown by an outward shift namely an increase of the offer curve of the subsidizing country by contrast a graphical representation of a vie is more complex and is displayed in figure 1

international capital mobility shadow prices and the cost of protection this paper studies the welfare losses from tariff protection in a small open economy when some factors are internationally mobile our principal result is that international fictor mobility must raise the cost of protection more specifically the welfare loss resulting from a uniform increase in tariffs in a competitive small open economy is greater when tariff induced international factor movements take place than when factors are internationally immobile by contrast an exogen1ous inflow of factors in the presence of tariffs may increase or reduce the welfare loss associated with protection depending on whether or not the protected commodities use the foreign owned factors intensively relative to domestically owned factors these results are proven for a very general specification of the economy s technology in particular no restrictions are placed on the degree of vertical integration in production on the sectors into which factors are internationally mobile or on the number of goods and factors our main result holds whether or not an increase in tariff rates leads the economy to specialise in addition we show how our results relate to earlier work on immiserising capital inflows and on negative shadow prices for factors of production thus synthesizing a number of recent results within a common framework the paper is organised as follows in section 2 we explain our framework and derive expressions for the welfare effects of tariffs when all factors are domestically owned and when some factors are foreign owned but not internationally

consumer behaviour theory and empirical evidence a survey this survey is designed to emphasize the relationship between empirical a nd theoretical considerations in the analysis of consumer behavior a lthough it focuses primarily on analysis at the individual or micro l evel it tries where possible to draw implications for the estimati on of aggregate relationships the importance of micro level analysis stems from the rapid expansion in available panel and survey data se ts this development has generated its own theoretical and empirical issues many of which are raised in this survey copyright 1988 by royal economic society

welfare maximizing and revenue maximizing tariffs with a few domestic firms in this paper we compare the orthodox optimal tariff formula with the appropriate welfare maximizing tariff when there are a few producing or importing firms the welfare maximizing tariff can be very low voire negative in some cases while in others it can even exceed the maximum revenue tariff the relationship between the welfare maximizing tariff and the number of firms need not be monotonically increasing because the tariff is not strictly used to internalize terms of trade externality it is also used to manipulate cost asym metries between producing and importing firms welfare maximizing specific tariffs are never worse than their ad valorem counterparts jel classification f13 l13

results oriented versus rules oriented trade policies a theoretical survey this paper surveys the recent literature on results oriented versus rules oriented trade policies after presenting a simple setting capturing the basics of results oriented markets access schemes we discuss extensions which have been or might be developed in this line of research in particular we investigate how the use of simple costly verification of information models might be fruitfully applied to analyze the incentives for countries to choose between results oriented and rules oriented trade policies

does international harmonization of environmental policy instruments make economic sense harmonization of the instruments used in environmental policy has beenconsidered necessary to guarantee fair competition in internationalmarkets we examine the economic costs of harmonizing paper recyclingstandards in countries where the urgency of the waste disposal problemsdiffer using data of seven european countries we estimate thetechnologically feasible input combinations of pulp and waste paper forpaper production short term effects of two environmental policy measures minimum content requirement and utilization rate target are analyzed bytranslating the two administrative instruments into taxes and subsidies weshow that the shadow costs of the harmonization vary considerably betweencountries the difference in the domestic availability of waste may explainthe variation and a modification of the policy measures to incorporate thisaspect is suggested

racial discrimination dualistic labor markets and foreign investment abstract this paper presents a model of racial discrimination in a stylized two sector dual economy model with direct foreign investment racial discrimination is analyzed both in terms of preferences and in terms of regulations that favor one ethnic group at the expense of another the focus is on the gains to white labor that accrue from restrictions on employment of black labor both in a closed economy and in one open to direct foreign investment

import sensitive products and perverse tariff rate quota liberalization this paper shows that a tariff rate quota s trq minimum access expansion can perversely trigger domestic price increases often trqs have prohibitive over quota tariffs to mimic import quotas in providing minimum market access in the wto s doha round it is likely that countries using trqs will avoid aggressive tariff reductions if they increase the quota portion of trqs we show that when the import price lies between the unit cost of production and the price received by domestic upstream firms an increase in import quota as a share of domestic production may cause an increase in the domestic retail price une expansion de l acces minimum au marche d un contingent tarifaire ct peut generer des augmentations perverses de prix internes souvent les ct ont des tarifs hors contingent prohibitifs pour reproduire les effets des quotas a l importation tout en garantissant un acces minimum au marche dans le cycle de doha de l omc il est probable que les pays utilisant des ct vont pouvoir eviter des reductions importantes de tarifs si le contingent des ct est augmente nous montrons qu une augmentation du contingent defini comme une fraction de la production interne peut engendrer une augmentation du prix interne des detaillants si le prix des importations se situe entre le cout unitaire de production et le prix interne des firmes en amont

the effects of a content requirement on a foreign duopsonist abstract this paper considers the operation of a local content requirement in a duopsony between domestic and foreign firms and demonstrates its consequences for the domestic producer of a final good it is shown that content protection may have perverse effects on a foreign firm s profits and may be welfare improving overall shifting profits from the domestic firm to both the foreign firm and domestic input producers

trade and protection with multistage production this paper analyses trade in manuf acutured goods that are produced via a vertical production structure with many stages where some value is added at each to an intermediate product to yield a good in process ready for the next stage we consider the stage at which a good is traded to be an economically endogenous variable with comparative advantage determining the pattern of production specialization by stages across countries we study how endowment changes and policy shifts move the margin of comparative advantage which thus provides a channel for resource allocation adjustment that is additional to the usual ones of factor substitution and changes in the quantity of output

trade restrictions as facilitating practices abstract the effect of quantitative restrictions in oligopolistic markets is shown to depend on whether imports are substitutes or complements for domestic products in the former case they have profound effects even when set at free trade levels because they impede the ability of the foreign firm to compete in the domestic market thereby acting to facilitate collusion and raise prices and profits for this reason tariffs and quotas are fundamentally non equivalent with substitute goods when goods are complements a voluntary export restriction ver at the free trade level has no effect and tariffs and quotas are equivalent

a flexible multistage demand system based on indirect separability the notion of indirect separability is exploited to derive a new multistage demand system the model allows a consistent parameterization of demand relations at various budgeting stages and it fulfills the requirement of flexibility while satisfying separability globally two propositions are derived to characterize flexible and separable functional forms which lead to the specification of a flexible and separable translog fast demand system the model is particularly attractive for modeling large complete demand systems and is illustrated with an application

ec members fighting about surplus vers fdi and japanese cars the distribution of consumer and producer surplus among ec members of three different trade regimes free trade a voluntary export restraint ver and a ver in conjunction with foreign direct inv

sleeping quotas pre emptive quota bidding and monopoly power abstract we rationalize the puzzling existence of binding quotas that are not fully utilized our model has its roots in bhagwati 1965 in r baldwin et al eds trade growth and the balance of payments essays in honor of g haberler mit press new york on tariffs quotas equivalence and is related to the io literature on preemption we study the conditions that lead a monopolist facing a quota restricted market to buy the quota licenses itself and the conditions under which they may remain unused the divisibility of the quota is crucial for the monopolist to pre emptively buy the quota furthermore we study the implications of use it orlose it clauses commonly imposed on auctioned quotas

can subsidies for mars be procompetitive in contrast to recent literature we show that market access requirements mars can be implemented in a procompetitive manner even in the absence of threats in related markets by focusing on subsidies that are paid only when the requirement is met we show that a mar can increase aggregate output relative to free trade provided that the right set of firms is targeted in the context of a model with multiple japanese and u s firms we show that a mar on u s imports is procompetitive as long as the u s firms are the ones targeted to receive the subsidy jel classification f13 est ce que les subventions pour promouvoir la penetration du marcheetranger peuvent promouvoir la concurrence contrairement a ce qui ressort de la litterature specialisee recente les auteurs montrent que l on peut mettre en place des mesures pour promouvoir la penetration du marcheetranger de telle maniere que cela promeuve la concurrence et ce meme en l absence de menaces dans des marches relies en mettant l accent sur les subventions payees quand les objectifs de penetration sont remplis on montre que de telles pratiques peuvent accroire le niveau de production par rapport a ce qu il serait dans un monde de libre echange pourvu que le bon ensemble de firmes soit cible dans un modele ou coexistent plusieurs firmes americaines et japonaises on montre que de tels efforts quand ils portent sur les importations en provenance des etats unis promeuvent la concurrence tant que ce sont les firmes americaines qui recoivent la subvention

windfall profits and vertical relationships who gained in the japanese auto industry from vers this paper employs an event study to analyze the effect of the 1981 voluntary export restraint agreements on profits in the japanese automobile industry stock price movements of seven japanese automakers and sixty nine of their suppliers are examined the results indicate that the profits of japan s producers of passenger cars rose as a result of the voluntary export restraints while only some suppliers large ones and those producing specialized parts or services appear to have shared the benefits voluntary export restraints increased profits for some firms in the japanese auto industry but many suppliers did not share the windfall copyright 1993 by blackwell publishing ltd

local content requirements versus tariff equivalents how we measure matters this article develops a mechanism to measure the impact of local content requirements as quantitative restrictions we compare effects of the novel quantitative approach to the effects of a tariff equivalent which is more traditionally used to analyse these types of policies local content requirements increase output and value added in the affected sector but at the expense of other sectors leading to declines in gdp and trade across the economy comparing the two modelling approaches the differences in outcomes are shown to be significant

quotas and retaliation a re examination abstract this paper reconsiders the quota retaliation process examined by rodriquez and tower it is shown that their trade elimination outcome is a consequence of their particularly strong assumption on the distribution of quota rents once this assumption is weakened the tariff and quota retaliation processes become more alike and the possibility of a non zero trading equilibrium appears for the latter

biodiesel a new oildorado guaranteeing tax reductions and exemptions the european governments intend to increase the share of biofuels in total eu fuel consumption to 5 75 by 2010 the financial support of this eu objective is frequently justified by expected positive environmental impacts most notably the mitigation of climate change and by favorable employment effects in the agricultural sector this paper investigates the environmental and economic implications of the support of rapeseed based biodiesel as a substitute for fossil diesel based on a survey of recent empirical studies we find that the energy and greenhouse gas balances of this environmental strategy are clearly positive yet it appears to be unclear whether the overall environmental balance is also positive most importantly though biodiesel is not a cost efficient emission abatement strategy thus for the abatement of greenhouse gases we recommend more efficient alternatives based on both renewable and conventional technologies

reform of coal policies in western and central europe implications for the environment abstract a subsidy to a polluting activity increases the level of that activity and therefore the amount of pollution it generates ceteris paribus in western europe coal production is generally subsidized through price support and budgetary transfers in central europe both production and consumption are subsidized to analyse the net effects of coal policies in europe however one cannot treat them simply as equivalent to pure taxes or subsidies other distortions besides those that are price induced have to be taken into account our qualitative assessment suggests that eliminating producer and consumer subsidies to coal in europe would lead to environmental improvements and remove an important barrier to introducing greater competition in national electric power industries

the uruguay round agreements impact on developing countries abstract implementation of the results of uruguay round will bring about significant increases in trade investment income and welfare for developing countries this derives from increased market access to developed countries markets and from enhanced efficiency originating from their own liberalization commitments although the distribution of benefits will be uneven developing countries will also benefit from improved rules for trade and investment coupled with enhanced institutional enforcement of these rules and greater exposure to global competition within a more predictable secure and credible international trading environment to maximize the benefits however developing countries will need to continue with recent unilateral reforms to improve their supply response

keiretsu and relationship specific investment implications for market opening trade policy abstract this paper considers the implications of relationship specific investment within keiretsu for policies aimed at opening the japanese market for intermediate goods such as auto parts both vies applied to parts and vers restricting japanese exports of autos cause the keiretsu to import a wider range of parts but of a relatively unimportant type such as seat covers since keiretsu investment and output fall the total value of us parts exports may actually fall for a given value of these exports a vie is less costly for us consumers and japanese producers but a ver is preferred by us automakers

import now an analysis of market share voluntary import expansions vies abstract proponents claim that voluntary import expansions vies increase foreign access to a domestic market while increasing competition and reducing prices using a bertrand model i show that a vie produces exactly the opposite results a vie that increases the market share of imports above the prevailing level results in higher prices in the domestic market this result holds even when the domestic market is assumed to be protected by a tariff type barrier prior to the imposition of a vie a vie and an equivalent import subsidy are shown to have opposite effects on prices

origin of predictable behavior further modeling and applications economic theory is founded on the assumption that agents act as if they are able to maximize according to well behaved preferences regardless of how complex their decision problems might be consequently the theory has never investigated the consequences of a genuine gap between an agent s decision making competence and the difficulty of a decision problem called a c d gap in a recent paper 1983 hereafter called the origin paper i outlined a general theory for investigating the latter possibility a major theme was that recurrent pattern in behavior arises because of decision making uncertainty due to a c d gap so that uncertainty becomes the basic source of predictable behavior here i discuss certain theory topics that were only sketched in the origin paper and briefly suggest a few related applications to pursue these objectives i begin with a short restatement of the reliability condition introduced in the origin paper

a new test for manufacturing industry efficiency an analysis of the results of import licence tendering in new zealand abstract one test of the relative productive inefficiency of the protected manufacturing industries found in many newly industrialising countries is the percentage by which domestic prices exceed world prices it is suggested that these price differentials are reflected in the premiums paid for import licences under the public sealed bid tendering scheme currently operating in new zealand the premium results for 22 roughly compiled industries suggest that nearly three quarters 15 have estimated unit costs 40 percent or more above those of efficient overseas producers evidently the long term policy of industrial diversification through protection has produced substantial resource misallocation in the economy

compositional standards import permits and market structure the case of canadian cheese imports the imposition of cheese compositional standards by the canadian authorities has created divisions within the canadian dairy industry and has motivated criticisms from several of canada s trade partners the standards impose minimum limits on the percentage of casein coming from fluid milk we develop a theoretical model to investigate the implications of canada s compositional cheese standards while accounting for canada s trade policy we illustrate why a type of cheese that is not directly impacted by the standards might be the most affected we show that the standards can decrease the domestic demand for milk or the value of imports our empirical investigation identified breaks in the processes determining import unit values shortly before or shortly after the beginning of the implementation of the standards

quota licenses for imported capital equipment could bureaucrats ever do better than the market abstract despite valid criticisms many developing countries have issued non transferable import licenses to a limited number of final good producers so as to restrict imports of an input such as capital equipment this paper demonstrates that for a given import quota such licensing restrictions can actually increase domestic production of both the input and the final product but at the cost of reduced quota rents under pure competition domestic welfare falls relative to the use of marketable quota licenses but if foreigners would get the quota rents or if external economies cause decreasing costs then bureaucratic allocation can dominate

preemptive patenting and the persistence of monopoly this article takes a different tack and inquires whether institutions such as the patent system create opportunities for firms with monopoly power to maintain their monopoly power the results apply to other situations such as brand identification spatial location and capacity expansion which share the characteristic that early or preemptive actions may lower the returns to potential competitors

the economics of rumours this paper studies a class of information transmission processes which we call rumours the distinctive features of these processes are that the information transmission takes place in such a way that the recipient does not quite know whether or not to believe the information and that the probability that someone receives the information depends on how many people already have it specifically we study an example in which there is an investment project with returns only known to a few people these people have a cost of undertaking the project and this cost is private information the only information the other agents receive is that someone else has invested they are not told whether that person actually knew the returns or whether he too was just acting on the basis of his observation of others they use their optimal bayesian decision rule to decide whether to invest we show that for a wide class of alternative specifications this decision rule has the property that a positive fraction of those who observe the rumour will not invest in this sense a rumour cannot mislead everybody counter intuitive comparative statics results are obtained for example more information and higher productivity may reduce welfare while changing the speed with which the rumour spreads has no welfare effect

analysis of perfonnance standards for direct foreign investments within the framework of a duopolistic model we investigate the impact of foreign investment standards on welfare output and employment minimum local content and export requirements reduce world output world welfare and the source country s welfare under certain conditions the decline in host country s consumer surplus resulting from diminished competition outweighs the shift of monopoly rent from the source country s firm to the host country s firm minimum content standards can increase host country s employment but only to a point marginal increases in the content requirement can actually reduce employment as the magnitude of foreign investment declines

tariffs quotas and voluntary export restraints with and without internationally mobile capital this paper presents a general framework for comparing the effects of tariffs quotas and vers voluntary export restraints both with and without international capital mobility expressions for the shadow price of foreign exchange and the shadow price of capital under each type of trade restriction are derived and it is shown that although international capital mobility raises the welfare cost of tariff protection it lowers the welfare cost of quantitative restrictions in most cases the effects of exogenous shocks in the presence of quotas are intermediate between those in the presence of tariffs and those in the presence of vers tarifs douaniers contingentements et restrictions volontaires d l exportation quand le capital est ou n est pas mobile internationalement l auteur presente un cadre general d analyse qu il utilise pour comparer les effets de tarifs douaniers de contingentements et de restrictions volontaires a l exportation dans des contextes ofu le capital est ou n est pas mobile internationalement l auteur derive le prix fictif du change etranger et le prix fictif du capital sous l un et l autre types de restrictions au commerce et montre que meme si la mobilite internationale du capital augmente le cofut en terme de bien etre de la protection tarifaire elle reduit le cofut en terme de bien etre des restrictions sur les quantites echangees dans tous les cas les effets de chocs exogenes quand des contingentements existent sont toujours dans la fourchette entre ceux qu on observe quand des tarifs douaniers existent et ceux qui prevalent quand des restrictions volontaires i l exportation existent

tariffs quotas and domestic content protection some political economy considerations in this paper we have focused our attention on the relation between the configuration of protection seeking and of rent seeking interests and the choice of the protection instruments in doing so we have abstracted from the problem of nonequivalence of tariffs and quotas recent writings on product differentiation rodriguez 1979 donnenfeld 1984 have thrown new light on this old issue it may well be that the discussion is of key importance to the understanding of industry s predilection for quantitative restraints we also failed to deal with the question on nonequivalence of restrictive measures under conditions of uncertainty finally we touched only peripherally on the interaction among state it is perhaps more realistic to regard trade barrier formation as a game among nations as in baldwin and clarke 1985 every player seeks at once to protect its import substituting industries and to promote its exports by putting up barriers and by demanding that others lower theirs this approach is more suited however to explain the severity of restraints than it is to explain the nature of restraints which is the problem at hand trade restrictions have a protective and a revenue effect in less developed countries with ineffectual internal revenue collecting systems revenue seeking governments may ally themselves with protection seeking emergent industries and institute high tariffs tariffs and quotas may coexist if the trade restriction seeking alliance includes traders voluntary export restraints the newest of the protective devices may be popular because they circumvent international treaties and short circuit cumbersome procedures associated with changes in tariffs or quotas but they also have the virtue of inviting foreign exporters to act like price setters the harm to the foreign exporters is thereby mitigated in fact exporters may be gainers hence the danger of retaliatory action on the part of foreign governments is lessened domestic content legislation is a unique device in that the same domestic factor benefits from protection and also collects the protection created revenue we show the formal identity between the south african situation in which the maximum black white worker ratio is a binding constraint and regulations requiring that a given percentage of the value of the product be domestically produced we also derive formally the maximum permissible foreign content ratio which is optimal from the point of view of the protected interests in our analysis we have said virtually nothing about the victims of protectionism a discussion of the impact of the various measures on those who bear the cost of protection would doubtless deepen our understanding of the problem we should thus consider the magnitude of the deadweight loss and of the income transfer and the concentration or dispersion of the losers last but not least we should consider the question of awareness thus the cost impact of a tariff is easier to perceive than that of a quota with the cost of a ver or of domestic import content rule the most difficult to calculate of all it may be that the principle of the hiding hand is as important to the new political economy as the benthamite principles were to the old

quotas as options quota licenses are options their price is given by expected discounted future value which hangs on the possibility that the quota may bind a number of auxiliary administrative details of quota systems are also analyzed in this context the presence of use it or lose it requirements and of restrictions on rate of usage of the annual quota can be seen as attempts to offset the implied protection on below limit imports they are shown to be inefficient recognition of the option valuation of quota licenses is rich with suggestions for future work on evaluation of quotas and comparisons with alternative schemes for protection

domestic content legislation house voting and the economic theory of regulation house voting on domestic content legislation provides a rare opportunity to examine the political economy of protectionism with respect to a particular issue rather than by using the traditional interindustry approach the results indicate that a representative s vote in favor of the content legislation and the intensity of the legislator s preferences are positively related to the importance of the auto and steel industries in the representative s district an increasing unemployment rate campaign contributions from labor groups affiliation with democratic party and a liberal ideology despite ideology s statistical significance the results suggest this variable can be disregarded because neither the predictive accuracy nor the explanatory power of the model is improved by its inclusion the estimates also provide insights concerning the impact of changes in the independent variables upon voting patterns

endogenous policy and supply management in a post gatt world previous studies of the effects of agricultural trade policy reform have treated internal policies for supply managed commodities as exogenous in our model however quotas on imports are chosen jointly with domestic production quotas to balance total wel fare and its distribution among producers consumers importers and taxpayers gatt and nafta regulations impose minimum import access requirements on supply managed com modities we show the unintended consequences of these regulations which arise from the induced adjustment of domestic quota policies using canadian supply management as an example

auctions with endogenous valuations the persistence of monopoly revisited it is shown that the standard arguments for a monopoly to persist break down when many units of capacity become available sequentially the reason is that deterring entry at one st age affects the cost of doing so in later stages this force can be so powerful that entry is deterred only at the final stage the persistence of monopoly or its erosion over time depends on the timi ng of arrival of capacity the size of early versus subsequent capacity availability the length of the capacity acquisition stage relative to the life of the industry and the discount factor copyright 1993 by american economic association

domestic content and compensatory export requirements protection of the motorvehicle industry in the philippines the motor vehicle industry in the philippines is protected by a virtual embargo on the importation of new vehicles but operates under the burden of domestic content and compensatory export requirements that protect philippine producers of automotive components this article develops a model to assess the net impact of this complicated protective regime estimates indicate substantial benefits to the assembly and components industries and losses to vehicle purchasers reform of the system to eliminate the embargo as well as the domestic content and compensatory export restraints at current tariff rates would benefit vehicle purchasers but would increase the effective rate of protection to assembly operations by decreasing prices of components reform measures to eliminate the domestic content and compensatory export requirements should be accompanied by simultaneous reductions in tariffs on assembled vehicles

impact of domestic content requirement on the us tobacco and cigarette industries abstract using a log linear equilibrium displacement model we quantify the impact of the recent domestic tobacco content requirement on us cigarette manufacturing we investigate effects on us growers and manufacturers and competing tobacco imports the policy increased domestic use of us grown tobacco but induced a small negative output effect tobacco imports decreased substantially the paper also discusses the political economic incentives for us manufacturers to comply with such policies the political cooperation between us growers and manufacturers decreases the opposition of the latter to protectionist policies championed by the former

hard coal subsidies a never ending story abstract in germany hard coal has been subsidized for almost half a century despite the declining significance of hard coal production for the domestic labor market the subsidies have continued to increase until the middle of the last decade reaching a peak at 6 7 billion in 1996 while these subsidies have been continually shrinking since then settling at 2 7 billion in 2005 it is very likely that hard coal support will be extended in germany well into the next decade and even beyond this article questions the main arguments raised by the proponents of hard coal subsidization in germany and other eu countries most importantly in addition to the drain these subsidies impose on public budgets substantial opportunity costs are implied leading funds away from alternative more beneficial public investments from a social welfare perspective we therefore recommend the rapid abolition of these subsidies not only in germany where in real terms the accumulated amount of subsidies has now far exceeded 165 billion but also all across europe

trade and the political economy of redistribution this paper shows how international trade affects the support for policies which redistribute income between workers across sectors and how the existence of such policies changes the support for trade liberalization workers who are imperfectly mobile across sectors vote on whether to subsidize ailing sectors thereby redistributing income but also distorting the labor allocation we present three main findings first redistributive policies are more likely to arise in a small open than in a closed economy for a broad range of parameters second if a redistributive policy is adopted in both situations income differences across sectors tend to be lower in the open economy third the possibility to redistribute income across sectors raises the political support for trade liberalization in the first place

rules of origin as commercial policy instruments this article examines the role of rules of origin as a commercial policy instrument that targets the input composition of imports using a three country partial equilibrium structure we demonstrate conditions under which the imposition of a binding rule will be welfare improving for an importer facing competitive export suppliers we further show that employing rules of origin in this way would be complementary to rather than a substitute for conventional optimal tariffs copyright economics department of the university of pennsylvania and the osaka university institute of social and economic research association

hidden costs of supply management in a small market canada regulates its dairy and poultry industries through supply management the supply management programs use target prices production quotas and import tariff rate quotas to raise domestic prices canadian supply managed producers cannot export their output to world markets as exports would be considered subsidized under world trade organization rules in this paper we show that once foregone export opportunities are accounted for supply management may no longer be beneficial to domestic producers of the supply managed commodities the extent to which foregone profits from exports dominate domestic rents depends on canada s comparative advantage domestic market elasticities and the extent of supply management distortion in the domestic market

the political economy of coal subsidies in europe abstract both the mining and the burning of coal is polluting so we might expect to observe taxes on coal production and consumption yet several countries of western europe subsidize coal production and most east european countries subsidize coal consumption the first part of this paper shows that those subsidies which are emulated by other rich and poor countries respectively have become enormous neoclassical political economy is used to examine why governments adopt such inappropriate policies when they are so wasteful of resources and damaging to the environment several new and offsetting political forces have been at work in western europe in recent years though causing some countries to dismantle their coal producer subsidies the paper concludes that these pressures for reform will continue to operate in the few remaining protectionist countries if coupled with more commercial diplomatic pressure from coal exporting countries they could be sufficient to see the end of such protection by early next century