nep-int New Economics Papers
on International Trade
Issue of 2017‒10‒22
25 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Globalization and State Capitalism: Assessing Vietnam's Accession to the WTO By Leonardo Baccini; Giammario Impullitti; Edmund J. Malesky
  2. Quality and Gravity in International Trade By Unger, Florian; Flach, Lisandra
  3. Export Hysteresis, Capacity Constraints and Uncertainty: A Smooth-Transition Analysis for Euro Area Member Countries By Ansgar Belke; Jan Wagemester
  4. Education, Governance, and Trade- and Distance-Related Technology Diffusion: Accounting for the Latin America-East Asia TFP Gap, and the TFP Impact of South America's Greater Distance to the North By Schiff, Maurice; Wang, Yanling
  5. The Globalisation of Inflation: The Growing Importance of Global Value Chains By Raphael A. Auer; Claudio Borio; Andrew Filardo
  6. Global Sourcing and Domestic Production Networks By Taiji Furusawa; Tomohiko Inui; Keiko Ito; Heiwai Tang
  7. Firm Heterogeneity and Exports in The Netherlands: Identifying Export Potential By Steven Brakman; Harry Garretsen; Raoul van Maarseveen; Peter Zwaneveld
  8. International Trade, Crowding Out, and Market Structure: Cournot Approach JEL Classification: 411, 422, 6111, 022 By James P. Gander
  9. Sizing up Market Failures in Export Pioneering Activities By Shang-Jin Wei; Ziru Wei; Jianhuan Xu
  10. All These Worlds Are Yours, Except India: The Effectiveness of Export Subsidies in Nepal By Fabrice Defever; José-Daniel Reyes; Alejandro Riaño; Gonzalo Varela
  11. On the role of vertical differentiation in enhancing the survival of export flows: Evidence from a developing country By Türkcan, Kemal; Saygili, Hülya
  12. Assessing the Determinants of Customs-Related Transaction Costs in Turkey By Halit Yanikkaya; Zeynep Aktas Koral
  13. Product Churning, Reallocation, and Chinese Export Growth By Hu, Zhongzhong; Rodrigue, Joel; Tan, Yong; Yu, Chunhai
  14. The Effect of Migration on Terror - Made at Home or Imported from Abroad? By Axel Dreher; Martin Gassebner; Paul Schaudt
  15. Firm Selection and the Role of Union Heterogeneity By Marco de Pinto; Jochen Michaelis
  16. China’s Belt and Road: Can Europe Expect Trade Gains? By Alicia Garcia-Herrero; Jianwei Xu
  17. Expectations versus Reality of Pakistan China FTA By Mamoon, Dawood
  18. Investing in innovation and skills: Thriving in global value chains By Luca Marcolin; Mariagrazia Squicciarini
  19. Tariffs and Privatization Policy in a Bilateral Trade Model with Corporate Social Responsibility By Lee, Sang-Ho; Xu, Lili
  20. Measuring the gradualist approach to internationalization By M\'onica Clavel; Jes\'us Arteaga-Ortiz; Rub\'en Fern\'andez-Ortiz; Pablo Dorta-Gonz\'alez
  21. Global value chains, national innovation systems and economic development By Jan Fagerberg; Bengt-Åke Lundvall; Martin Srholec
  22. Manufacturing the future: is the manufacturing sector a driver of R&D, exports and productivity growth? By Alex Coad; Antonio Vezzani
  23. "Nash-in-Nash" Tariff Bargaining with and without MFN By Kyle Bagwell; Robert W. Staiger; Ali Yurukoglu
  24. International Trade with Increasing Returns in the Transportation Sector By Zhou, Haiwen
  25. Mediterraneo e Unione Europea tra migrazioni e crescita sostenibile By Schilirò, Daniele

  1. By: Leonardo Baccini; Giammario Impullitti; Edmund J. Malesky
    Abstract: What do state-owned enterprises (SOEs) do? How do they respond to market incentives? Can we expect substantial efficiency gains from trade liberalization in economies with a strong presence of SOEs? Using a new dataset of Vietnamese firms we document a set of empirical regularities distinguishing SOEs from private firms. We embed some of these features characterizing SOEs operations in a model of trade with firm heterogeneity and show that they can hinder the selection effects of openness and tame the aggregate productivity gains from trade. We empirically test these predictions analyzing the response of Vietnamese firms to the 2007 WTO accession. Our result show that WTO accession is associated with higher probability of exit, lower markups, and substantial increases in productivity for private firms but not for SOEs. Domestic barriers to entry and preferential access to credit are key drivers of the different response of SOEs to trade liberalization. Our estimates suggest that the overall productivity gains would have been about 66% larger in a counterfactual Vietnamese economy without SOEs.
    Keywords: state capitalism, state-owned enterprises, trade liberalization, heterogeneous firms, gains from trade, WTO, Vietnam
    JEL: F12 F13 F14 P31 P33
    Date: 2017
  2. By: Unger, Florian; Flach, Lisandra
    Abstract: We show that the effect of fixed costs on international trade is lower in industries with a high degree of vertical product differentiation. We extend an international trade model by endogenous quality investmetns and use both aggregate trade data and firm-level data to estimate gravity equations of exports. Accounting for quality lowers the positive gains from trade and leads to more heterogeneous effects across industries compared to a trade model without quality.
    JEL: F12 F14 L11
    Date: 2017
  3. By: Ansgar Belke; Jan Wagemester
    Abstract: We argue that, under certain conditions described by a sunk cost hysteresis model, firms consider exports as a substitute for domestic demand. This is valid also on the macroeconomic level where the switch from the domestic market to the export market and vice versa takes place in a smooth manner. Areas of weak reaction of exports to changes in domestic demand are widened by uncertainty. Our econometric model for six euro area countries suggests domestic demand and capacity constraints as additional variables for export equations. We apply the exponential and logistic variant of a smooth transition regression model and find that domestic demand developments and uncertainty are relevant for short-run export dynamics particularly during more extreme stages of the business cycle. A substitutive relationship between domestic and foreign sales can most clearly be found for France, Greece and Ireland (ESTR model) and France, Portugal and Italy (LSTAR model), providing evidence of the importance of sunk costs and hysteresis in international trade in these EMU member countries. What is more, our empirical results are robust to the inclusion of a variable measuring European policy uncertainty. In some cases (Italy, Greece and Portugal) the results underscore the empirical validity of the export hysteresis under uncertainty model.
    Keywords: domestic demand pressure, exports, error-correction models, hysteresis, modelling techniques, smooth-transition models, sunk costs, uncertainty
    JEL: F14 C22 C50 C51 F10
    Date: 2017
  4. By: Schiff, Maurice (World Bank); Wang, Yanling (Carleton University)
    Abstract: This paper examines the impact of education, governance and North-South trade- and distance-related technology diffusion on TFP in the South, focusing on South America (SA), Mexico, Latin America (LA) and East Asia for the 32-year period preceding the Great Recession (1976–2007) in a new model that integrates models of trade-related and distance-related international technology diffusion. Our model's explanatory power is 38% (62%) greater than that of the main trade-related (distance-related) model. Findings are: i) TFP increases with education, trade, governance (ETG) and imports' R&D content, and declines with distance to the North; ii) an increase in LA's ETG to East Asia's level raises LA's TFP by some 100% and accounts for about 75% of its TFP gap with East Asia; iii) raising LA's education to East Asia's level has a larger impact on TFP and on the TFP gap than raising governance or openness; iv) the TFP impact on South America relative to Mexico due to its greater distance to US-Canada (Europe) (Japan) is -18.9 (-2.13) (-9.78)%, with an overall impact of -12.4%.
    Keywords: education, governance, trade, distance, technology diffusion, productivity impact, Latin America, East Asia
    JEL: F13 I25 O19 O47
    Date: 2017–09
  5. By: Raphael A. Auer; Claudio Borio; Andrew Filardo
    Abstract: Greater international economic interconnectedness over recent decades has been changing inflation dynamics. This paper presents evidence that the expansion of global value chains (GVCs), ie cross-border trade in intermediate goods and services, is an important channel through which global economic slack influences domestic inflation. In particular, we document the extent to which the growth in GVCs explains the established empirical correlation between global economic slack and national inflation rates, both across countries and over time. Accounting for the role of GVCs, we also find that the conventional trade-based measures of openness used in previous studies are poor proxies for this transmission channel. The results support the hypothesis that as GVCs expand, direct and indirect competition among economies increases, making domestic inflation more sensitive to the global output gap. This can affect the trade-offs that central banks face when managing inflation.
    Keywords: globalization, inflation, Phillips curve, monetary policy, global value chain, production structure, international inflation synchronisation, input-output linkages, supply chain
    JEL: E31 E52 E58 F02 F41 F42 F14
    Date: 2017
  6. By: Taiji Furusawa; Tomohiko Inui; Keiko Ito; Heiwai Tang
    Abstract: This paper studies how firms’ offshoring decisions shape a country’s domestic production net- works. We develop a model in which heterogeneous firms source inputs from multiple industries located in different domestic regions and foreign countries. Input sourcing entails communication with suppliers, which is endogenously increasing in the differentiation of inputs. The model predicts that firms are less likely to source differentiated inputs, especially from distant domestic and foreign suppliers, due to costly communication. Triggered by foreign countries’ export supply shocks, firms start offshoring inputs from foreign suppliers, which displace the less productive domestic suppliers in the same industry (the direct displacement effect). The resulting decline in marginal costs induces firms to start sourcing from the more productive and distant domestic suppliers within industries (the within-industry restructuring effect), but possibly also from nearby suppliers that produce inputs that are more differentiated than those supplied by existing suppliers (the industry composition effect). The net effect of offshoring on a firm’s domestic production networks depends on the relative strength of the three effects, which we verify using data for 4.5 million buyer-seller links in Japan. Based on a firm-level instrument, we find that after offshoring, firms are less likely to drop suppliers on average, but more so for the larger ones. They tend to add nearby suppliers producing differentiated inputs. These results suggest that firms.offshoring may increase the spatial concentration of domestic production networks.
    Keywords: production networks, global sourcing, offshoring, face-to-face communication, industry agglomeration
    JEL: D22 D85 F14 L10 L14 R12
    Date: 2017
  7. By: Steven Brakman; Harry Garretsen; Raoul van Maarseveen; Peter Zwaneveld
    Abstract: Stimulating firms to become exporters is of interest to policy makers, as exporters are in general more productive than non-exporters. However, selecting high export potentials is difficult in practice. The contribution of this paper is to characterize and identify these (high) export potentials. According to the Melitz (2003) model, potential exporters have to be productive enough to overcome the entry costs of foreign markets. Once firms pass this productivity threshold, they all export. Empirical evidence, however, indicates that a substantial share of high-productive firms does not export. In this paper, we focus specifically on this group of high-productive non-exporters. We employ a large micro-dataset for Dutch firms both in services and manufacturing for 2010-2014. Our findings are threefold. First, high productivity is an important, but not a sufficient condition for exporting. Firm size (substitute for productivity), import status, and foreign ownership are also important. Second, firm location is crucial. A location in peripheral areas prevents high productive firms from exporting; especially a location in the Northern part of the Netherlands reduces the probability to export. Third, the manufacturing sector differs from the services sector. Given that the median exporter in our sample is a services firm; this sector should be included in export research.
    Keywords: firm heterogeneity, export behavior, location
    JEL: F12 F14
    Date: 2017
  8. By: James P. Gander
    Abstract: Using traditional Cournot demand concepts, the effect of an increase in export demand on the price and domestic quantity demanded for a given product under different market structures and production cost structures is examined. In general, an increase in the product price will result in a reduction in the domestic quantity demanded. This is the case of “Crowding Out” (CO), analogous to that found in macroeconomics loanable funds analysis. An explicit algebraic simple model is developed for different cost structures; for which is derived several indexes of “CO”. These indexes will reflect the different market structures by “n”, the number of firms in the industry. With these indexes, different export trade sceneries are demonstrated and discussed. One significant result is that for the decreasing cost case, there is the opposite effect, “Crowding In”. Some implications of “CO” for international trade policy are discussed briefly.
    Date: 2017
  9. By: Shang-Jin Wei; Ziru Wei; Jianhuan Xu
    Abstract: We argue that existence of public good does not necessarily imply market failure, and illustrate this point in the context of international trade. An influential hypothesis states that export pioneers are too few relative to social optimum because the first exporter's action creates an informational public good for all subsequent exporters. The hypothesis has been invoked to justify certain types of government interventions. We note, however, that such market failure requires two inequalities to hold simultaneously: the discovery cost is neither too low nor too high. Neither has to hold in the data. We propose a structural estimation framework to evaluate the hypothesis, and estimate the parameters based on the customs data of Chinese electronics exports. Our key finding is that "missing pioneers" are a low-probability event for large countries, but can be a serious problem for small economies.
    JEL: F1
    Date: 2017–10
  10. By: Fabrice Defever; José-Daniel Reyes; Alejandro Riaño; Gonzalo Varela
    Abstract: This paper evaluates the effect on firm-level export outcomes of the Cash Incentive Scheme for Exports program provided by the Government of Nepal. The analysis utilizes customs-level data for 2011-14, combined with information on the subsidy payments made to individual firms provided by the Central Bank of Nepal. The Cash Incentive Scheme for Exports cash subsidy is available to firms exporting a select group of products, and requires firms to export to countries other than India. Overall, the subsidy has not produced a significant impact on firm-level export values, prices, quantities, or their growth rates. However, the study finds a small positive effect on the number of eligible products exported to countries other than India and the number of destination markets reached among firms that receive the subsidy. These results are consistent with the fact that the subsidy was granted primarily to large exporters that were already shipping eligible products to countries other than India. The findings suggest that although the cash subsidy has not produced a significant increase in exports, it has achieved a positive impact on export diversification for firms that were already satisfying the scheme’s eligibility criteria.
    Keywords: export subsidies, export diversification, performance requirements, trade policy, Nepal
    JEL: F12 F13 O47
    Date: 2017
  11. By: Türkcan, Kemal; Saygili, Hülya
    Abstract: This paper analyzes the role of vertical differentiation linked with global production networks in increasing the chance of export survival using highly disaggregated machinery exports data from Turkey for the 1998-2013 period. Results obtained from the descriptive statistics analysis suggest that the duration of Turkey's machinery exports is remarkably short with a median duration of merely one year. In addition, the likelihood of the survival of exports varies widely across total machinery, finished and parts and components as well as across trade types (horizontally and vertically differentiated products). Based on discrete-time duration models, the empirical results demonstrate that vertical differentiation together with product and market diversification are associated with a higher export survival rate, particularly for parts and components. The evidence hence supports the hypothesis that global production sharing activities greatly increase the chances of survival in export markets.
    Keywords: export duration,survival analysis,vertical differentiation,global production networks
    JEL: F10 F14 C41
    Date: 2017
  12. By: Halit Yanikkaya (Department of Economics, Gebze Technical University); Zeynep Aktas Koral (Department of Economics, Gebze Technical University)
    Abstract: Growing world trade puts forward the importance of trade liberalization and facilitation issues. As trade liberalization efforts of both governments and international organizations have mostly been successful, the importance of bureaucratic and informal impediments to international trade has been increased. An important part of these impediments is generally composed of complicated customs procedures and documentation requirements that generate the principal part of customs-related transaction costs. In this study, we examine the role of several factors in the determination of customs-related transaction costs, especially the waiting time to clear the cargo already in some Turkish ports. We find that customs-clearance line, customs personnel, institutions other than customs offices and information technology structure of the country are the principal factors having important roles in determination of these costs. However, there are several important factors affecting these costs through the customs clearance lines such as simplified procedures, frequency of operations, firm size, country of origin, type of the goods and some other risk factors.
    Keywords: transaction costs, customs procedures, in-depth interview, Turkey
    JEL: C93 D23 F10
    Date: 2017–08–18
  13. By: Hu, Zhongzhong; Rodrigue, Joel; Tan, Yong; Yu, Chunhai
    Abstract: This paper quantifies the separate contribution of idiosyncratic productivity and demand growth on aggregate Chinese exports. We develop firm, product, market and year specific measures of productivity and demand. We use these measures to document a number of novel findings that distinguish the growth of Chinese exports. First, we document that changes in demand explain nearly 78–89% of aggregate export growth, while only 11–22%of export growth is determined by productivity growth. Second, our results highlight two mechanisms which contribute significantly to aggregate export growth: the rapid reallocation of market shares towards products with growing demand, and high rates of product exit among low demand products. Investigating the mechanisms underlying these results we find that new exporters suffer demand shocks which are 66% smaller than those observed for incumbent producers in the same product market. By comparison, we find that there is only an 8% difference on average between the productivity of new and incumbent exporters.Repeating our exercise with revenue productivity reveals much smaller differences. This is largely attributed to differential movements in prices and marginal costs.
    Keywords: Exports, China, Productivity, Demand
    JEL: D24 F12 L11 L25
    Date: 2017–10–07
  14. By: Axel Dreher; Martin Gassebner; Paul Schaudt
    Abstract: We analyze the causal effect of the stock of foreigners residing in a country on the probability of a terrorist attack in that country. Our instrument for the stock of foreigners relies on the interactions of two sets of variables. Variation across host-origin-dyads results from structural characteristics between the country of origin and the host, while variation over time makes use of changes in push and pull factors between host and origin countries resulting from natural disasters. Using data for 20 OECD host countries and 183 countries of origin over the 1980- 2010 period we show that the probability of a terrorist attack increases with a larger number of foreigners living in a country. However, this scale effect is not larger than the effect domestic populations have on domestic terror. We find scarce evidence that terror is systematically imported from countries with large Muslim populations or countries where terror prevails. Policies that exclude foreigners already living in a country increase rather than reduce the risk that foreign populations turn violent, and so do terrorist attacks against foreigners in their host country. High skilled migrants are associated with a significantly lower risk of terror compared to low skilled ones, while there is no significant difference between male and female migrants.
    Keywords: terrorism, migration, migration policy
    JEL: D74 F22 F52 P48
    Date: 2017
  15. By: Marco de Pinto (IAAEU Trier and Trier University); Jochen Michaelis (University of Kassel)
    Abstract: Empirical evidence suggests that high-productivity firms face stronger trade unions than low-productivity firms. Then a policy that puts all unions into a better bargaining position is no longer neutral for firm selection as in models with a uniform bargaining strength across firms. Using a Melitz-type model, we show that firm selection becomes less severe. Since more low-productivity firms enter the market, the negative employment effect of unionization is mitigated. Neglecting inter-union differences in bargaining power leads to an overestimation of the negative labor market effects. However, trade liberalization increases unemployment because firms with the least powerful labor unions have to leave the market.
    Keywords: Trade Unions, Bargaining Power, Firm Heterogeneity, International Trade, Unemployment
    JEL: F1 F16 J5
    Date: 2017
  16. By: Alicia Garcia-Herrero (Adjunct Professor, Department of Economics, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology; Chief Economist for Asia Pacific at NATIXIS); Jianwei Xu (Associate Professor, Beijing Normal University)
    Abstract: Alicia Garcia-Herrero, HKUST IEMS Faculty Associate and Chief Economist for the Asia Pacific at NATIXIS, asks how Xi Jinping’s One Belt One Road initiative will affect EU trade. The colossal infrastructure project is set to upturn trade relationships across Eurasia, yet the examination of its effects is still “embryonic”. Who will be the major winners and losers in trade? How would FTAs between China and OBOR nations affect the EU? In this latest IEMS Thought Leadership Brief, Prof García-Herrero makes the case for why it is time for the EU to actively participate in the Belt and Road Initiative. The study was conducted at Bruegel Research Institute with colleague Jianwei Xu.
    Keywords: Belt & Road, china, China-EU Trade, infrastructure, international economic system, International Trade, One Belt One Road
    Date: 2016–12
  17. By: Mamoon, Dawood
    Abstract: Pakistan-China FTA was implemented with lot of fanfare and was expected to improve Pakistani export potential and business competitiveness. However, the successive governments failed to improve local competitiveness through effective regulation resulting in (a) missed opportunity to exploit the FTA to the benefit of Pakistan and (b) a trade balance favouring only China.
    Keywords: FTAs, Export Promotion, Regulation
    JEL: F15
    Date: 2017–10–17
  18. By: Luca Marcolin (OECD); Mariagrazia Squicciarini (OECD)
    Abstract: This paper synthesises the main policy implications of OECD work focusing on the interplay between participation and positioning in global value chains (GVCs), employment demand and supply and workforce’s skills endowment. They relate to: the way innovation, technology and participation in GVCs shape employment in routine intensive and non-routine jobs; the relationship between participation in GVCs and polarisation of employment; the way the skill composition of a country’s workforce – both the type of skills and their distribution – shapes specialisation and positioning along GVCs; and the complementarities emerging between GVC participation and investment in knowledge-based capital, especially organisational capital and ICT.
    Date: 2017–10–19
  19. By: Lee, Sang-Ho; Xu, Lili
    Abstract: This paper considers an international bilateral trade model with corporate social responsibility (CSR) and examines the strategic interaction between tariffs and privatization policy. We demonstrate that strategic tariff in a private market is higher than that in a mixed market, while efficient tariff in a private market is lower than that in a mixed market. We then show that privatization policy raises strategic tariff and worsens (improves) domestic welfare when the degree of CSR is low (high). Further, we investigate endogenous choice of privatization policy and demonstrate that both the countries choose nationalization policy even though privatization policy is globally optimal when the degree of CSR is high. This indicates the existence of a prisoner’s dilemma in choosing privatization policy in a bilateral trade model with higher CSR.
    Keywords: Bilateral trade, Corporate social responsibility, Privatization, Tariff Policy
    JEL: D43 F12 L13 L33
    Date: 2017–10
  20. By: M\'onica Clavel; Jes\'us Arteaga-Ortiz; Rub\'en Fern\'andez-Ortiz; Pablo Dorta-Gonz\'alez
    Abstract: The objective of this paper is to fill a gap in the literature on internationalization, in relation to the absence of objective and measurable performance indicators on the process of how firms sequentially enter external markets. To that end, this research develops a quantitative tool that can be used as a performance indicator of gradualness for firms entering external markets at a sectoral level. The performance indicator is based on firms' export volume, number of years of exporting, geographic areas targeted for export, and when exports were initiated for each area. Additionally, the indicator is tested empirically in the Spanish wine sector. The main contribution of this study is the creation of an international priority index which serves as a valuable and reliable tool because of its potential use in other industry sectors and geographic areas, allowing us to analyze how geographically differentiated internationalization strategies develop.
    Date: 2017–10
  21. By: Jan Fagerberg (Centre for Technology, Innovation and Culture (TIK), University of Oslo & Department of Business and Management, Aalborg University); Bengt-Åke Lundvall (IKE, Department of Business and Management, Aalborg University); Martin Srholec (Center for Economic Research and Graduate Education-Economics Institute (CERGE-EI), Charles University, Prague and Centre for Innovation, Research and Competence in the Learning Economy (CIRCLE), Lund University)
    Abstract: This paper deals with the role of global value chains (GVC) and other aspects of “openness” for economic development. To analyse the issue a comprehensive framework that allows for the inclusion of a range of relevant factors including not only different form of openness, such as GVC participation, but also technological and social capabilities, is developed. The analysis is based on evidence from 125 countries, including many developing nations, over the period 1997-2013. It is shown that economic growth reflects the strength of the national innovation system and that GVC participation is not the potent driver of economic growth that tends to be assumed.
    Date: 2017–10
  22. By: Alex Coad (CENTRUM Católica Graduate Business School, Pontificia Universidad Católica del Perú, Lima, Perú); Antonio Vezzani (European Commission - JRC)
    Abstract: Many industrialized countries in Europe and North America have experienced a steady decline in the manufacturing sector over the last few decades. Amid growing concerns that outsourcing and offshoring have destabilized European economies, policymakers have suggested that a large manufacturing sector can: i) boost R&D, ii) encourage exporting, and iii) raise productivity. We examine these claims. Non-parametric plots and regressions show a robust positive association between the manufacturing sector and Business R&D expenditures (BERD), while the relationship between manufacturing and exports or productivity is more elusive. Finally, we explore whether a manufacturing sector target of 20% of value-added will help reach a BERD target of 3% of GDP.
    Keywords: Manufacturing sector, R&D, exporting, productivity, industrial policy, industrial renaissance
    Date: 2017–09
  23. By: Kyle Bagwell; Robert W. Staiger; Ali Yurukoglu
    Abstract: We provide an equilibrium analysis of the efficiency properties of bilateral tariff negotiations in a three-country, two-good general equilibrium model of international trade when transfers are not feasible. We consider "weak-rules" settings characterized by two cases: a no-rules case in which discriminatory tariffs are allowed, and an MFN-only case in which negotiated tariffs must be non-discriminatory (i.e., satisfy the MFN rule). We allow for a general family of political-economic country welfare functions and assess efficiency relative to these welfare functions. For the no-rules case with discriminatory tariffs, we consider simultaneous bilateral tariff negotiations and utilize the "Nash-in-Nash" solution concept of Horn and Wolinsky (1988). We establish a sense in which the resulting tariffs are inefficient and too low, so that excessive liberalization occurs from the perspective of the three countries. In the MFN-only case, we consider negotiations between two countries that are "principal suppliers" to each other and employ the Nash bargaining solution concept. Different possibilities arise. For one important situation, we establish a sense in which the resulting tariffs are inefficient and too high when evaluated relative to the unrestricted set of efficient tariffs. We also compare the negotiated tariffs under the MFN rule with the MFN-constrained efficiency frontier, finding that the negotiated tariffs are generically inefficient relative to this frontier and may lead to too little or too much liberalization. Finally, we illustrate our findings with a numerical analysis of a particular representation of the model as an endowment economy with Cobb-Douglas preferences and under the assumption that each government maximizes the indirect utility of the representative agent in its country.
    JEL: F13
    Date: 2017–10
  24. By: Zhou, Haiwen
    Abstract: In this general equilibrium framework, the transportation sector is modeled as a distinct sector with increasing returns. A more advanced technology has a higher fixed cost but a lower marginal cost of production. Even with both manufacturing firms and transportation firms engage in oligopolistic competition and choose technologies optimally, the model is tractable and results are derived analytically. Technology adoptions in the manufacturing sector and in the transportation sector are reinforcing and multiple equilibria may exist. Firms choose more advanced technologies and the prices decrease when the size of the population is larger.
    Keywords: Transportation costs, international trade, the choice of technology, increasing returns, strategic complementarity
    JEL: F10 O14 R40
    Date: 2017–10–13
  25. By: Schilirò, Daniele
    Abstract: Mediterraneo ed Europa sono due realtà storicamente legate da rapporti economici, culturali e sociali. Questo contributo esamina, in particolare, gli aspetti economici e sociali delle migrazioni verso l’Europa provenienti dai paesi del Sud ed Est del Mediterraneo e i diversi problemi che questi flussi stanno creando nei paesi dell’Unione europea, cercando di fornire qualche indicazione di policy utile per il superamento della difficile e complessa situazione e per realizzare una crescita sostenibile.
    Keywords: Mediterraneo; Unione Europea; migrazioni; demografia; crescita sostenibile
    JEL: F5 J0 J1 J11 J15 O11 O15 Q56
    Date: 2016–12

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