Networks of Free Trade Agreements among Heterogeneous Countries

The paper examines the formation of free trade agreements as a network formation game. We consider an n‐country model in which international trade occurs between economies with imperfectly competitive product markets. In each country, the labor market is either unionized or non‐unionized. We show that, if all countries are non‐unionized, the global free trade network is both the unique pairwise stable network and the unique efficient network. If all countries are unionized, the global free trade network is pairwise stable and the unique efficient network among the class of symmetric networks. If some countries are unionized while others are non‐unionized, other networks apart from the global free trade network may be pairwise stable. However, the efficient network is still the global free trade network. Thus, a conflict between stability and efficiency may occur. Moreover, starting from the network in which no country has signed a free trade agreement, all sequences of networks due to continuously profitable deviations do not lead (in most cases) to the global free trade network, even when global free trade is stable.     

分工演进对贸易政策的影响分析——基于交易成本的考虑

贸易政策同贸易理论是紧密联系在一起的.引入交易成本来分析分工演进对贸易政策的影响,不考虑交易成本条件下,贸易自由对于分工演进的国家是有利的;考虑交易成本条件下,随着分工演进,国家之间更加倾向于贸易谈判,最终结果为贸易自由化.但是由于各国交易效率不同,交易效率高的国家在贸易中获得的利益更多,而交易效率低的就会实行更多贸易保护.因此,我国需要降低交易成本,加强分工演进的速度,处理好国际之间的贸易摩擦.     

Positive feedback mechanisms in Adam Smith's theories of international trade

Smith understood and focused attention on dynamic growth explanations of trade patterns, and the gains from trade often ignored by subsequent theorists. This paper highlights the positive feedback mechanisms central to such an assessment of trade. The analysis invites a question that would appear out of place in a static gains from trade analysis: are rich countries afforded greater opportunities to gain from trade than poor countries? It is found that Smith's answer is yes. The gains from trade are systematically skewed toward rich countries in two ways. First, specialization according to a comparative advantage in a good characterized by limited increasing returns can result in a persistent state of slow growth or complete stagnation. Second, the gains available to the poor country from the transfer of technology are limited by the extent of the division of labor. Many technologies produced in rich countries cannot be utilized by poor countries without the technological expertise (which the division of labor creates) necessary to incorporate the technology into the productive structure of the poor country. Both of these results suggest that trade can help to perpetuate and even widen existing technology and productivity gaps between rich and poor countries.     

International trade and directed search unemployment in general equilibrium

We develop an open economy general equilibrium model, with auction‐based directed search unemployment, to study the interactions of trade and unemployment. The theory ascribes all outcomes purely to the fundamentals of technology and endowment. If countries differ by endowment, trade makes both the unemployment rate and the rental in the capital‐(labour‐) abundant country rise (decline) but does not lead to equalization. If, alternatively, countries differ by technology, trade increases (decreases) the unemployment rate in the country whose technology is relatively superior (inferior) for producing the capital‐intensive good.     

The Distributional and Allocative Impacts of Virtual Labor Mobility across Time Zones through Communication Networks

Using a specific‐factors' model, with two goods (a shift‐working good and a non‐shift‐working good), three factors (capital specific to shift‐working, land specific to non‐shift‐working and labor) and two countries (Home and Foreign), which are located in different time zones, we highlight the impact of trade in labor services via communication networks on factor prices and production patterns. If two countries are identical in size, then under free trade in labor services, all workers work only in their local daytime, and night shift in each country is performed by imported labor services supplied by residents of the other country in their local daytime. Night‐time wage becomes the same as daytime wage (a wage equalization result). Other factor prices are also equalized. In both countries, capital rental rate increases, while land rent decreases. However, if two countries are different in size, trade in labor services does not equalize wages: in the large country, wages for night‐shift workers are higher than daytime wages and some residents work at night; in the small country, daytime wages become higher than night‐time wages and no one works at night, and night‐shift work is done by imported labor services from the large country. Land rent in the small country decreases. Land rent in the large country may or may not decrease, but it is always higher than in the small country. Capital rental rates in both countries are equalized and increase.     

Uniqueness and comparative statics of Nash equilibrium in a tariff retaliation model

This paper considers uniqueness and comparative statics of Nash equilibrium of a tariff retaliation model. The approach to the problem is geometrical and reminiscent of the analysis for the free trade competitive equilibrium. If the countries have constant elasticity of substitution utility functions, some simple conditions can be used to prove uniqueness of the Nash equilibrium of the tariff retaliation game. The welfare effects of endowment changes are analyzed in terms of the standard terms of trade and volume of trade effects. If the elasticity of substitution of one of the countries is sufficiently high, immiserizing growth will not occur.      

Small Countries and Preferential Trade Agreements: How Severe is the Innocent Bystander Problem?

In this paper the welfare implications of preferential trade agreements (PTA) are examined from the perspective of small countries in the context of a multi-country general equilibrium model. We calibrate our model to represent one relatively small country and two symmetric big countries. We consider two cases. In one case, the small country is an 'innocent bystander', that is, it is left out of a PTA between the two large countries. In the second case, the small country signs a PTA with one of the large countries. We simulate the model and calculate consumption allocations, prices, trade volume, and tariffs in these two cases considering three different equilibria: free trade (FT), free trade association (FTA) and customs union (CU). We find that free trade is the best outcome for the small country. If the large country PTA takes the form of a CU then the cost of being an 'innocent bystander' is very large. If it is an FTA then the cost of being an 'innocent bystander' is relatively modest. In fact, the small country prefers to be an 'innocent bystander' to being a member of an FTA with one of the large countries.     

Endogenous Comparative Advantage*

We develop a model of trade between identical countries. Workers endogenously acquire skills that are imperfectly observed by firms; therefore, firms use aggregate country investment as the prior when evaluating workers. This creates an informational externality interacting with general equilibrium effects on each country's skill premium. Asymmetric equilibria with comparative advantages exist even when there is a unique equilibrium under autarky. Symmetric, no‐trade equilibria can be unstable under free trade. Welfare effects are ambiguous: trade can be Pareto‐improving even if it leads to an equilibrium between rich and poor countries, with no special advantage regarding country size.     

自然开放度、政策导向开放度与劳动生产率提升——理论和基于中国省际面板数据的实证研究

本文以李嘉图模型为基础,分析了贸易开放对提升中国劳动生产率的效应。本文使用1994-2005年间中国省际面板数据,就贸易开放对提升中国劳动生产率水平所产生的效应进行了实证研究。本文得出两个重要的分析结果:第一,贸易开放可以通过比较优势来确定一国专业化产品的生产,如果一国的比较优势存在于干中学系数较大的部门,贸易开放将提高劳动生产率;但若一国的比较优势存在于干中学系数较小的部门,贸易开放将降低劳动生产率;第二,本文将贸易开放度分解为自然开放度和政策导向开放度,结果发现,当自然开放度较小时,政策导向开放度的增加将降低劳动生产率;当自然开放度较大时,政策开放度的增加将提高劳动生产率水平。     

Technology for Sale

Free trade in commodities typically leads to gains for all participating countries. These gains can be augmented by trade in productive factors if returns differ between countries. But such trade would not exhaust potential gains if technological knowledge, not embedded in productive factors, differs between countries. Using a Ricardian model this paper shows how a country which has an absolute advantage based on technology in both commodities in a two-commodity world can gain by selling, giving, or even bribing the other country into using the advanced technology in the other country's export sector. If each country has an absolute advantage in the single commodity it produces, an exchange of technology for the other commodity can nonetheless lead to extra gains for both countries.     

论比较优势的成本基础——从生产成本向“全成本”的拓展

贸易理论的历史演进表明,比较优势是一国参与国际分工和贸易的基本动因。古典、新古典和新贸易理论分别从劳动生产率、要素禀赋、生产规模等不同视角论证了基于生产成本的比较优势,进而可表达为"相对生产成本不等式"。随着制度、生态环境、"可持续性"等要素在国际贸易中日趋重要,使用制度要素所形成的交易成本、使用生态环境要素所形成的环境成本、耗费"可持续性"要素所形成的代际成本也逐步成为比较优势的成本基础。于是,可将使用或耗费广义要素的代价理解为"全成本",它构成了一国参与国际分工和贸易的比较优势的基础。     

Trade Gains, Paretian Transfer and the Tragedy of the Commons

Consider trade liberalization between two countries, each of which produces two private goods and provides on a voluntary basis one public good (the common). In these circumstances, what are the consequences of trade liberalization on the production of the public good and on welfare in both countries? Using a Ricardian framework, we first show that the opening of trade increases the opportunity cost of producing the public good in both countries and will therefore reduce the aggregate supply of the public good. On the other hand, at the autarky equilibrium, only one country supplies the public good, the other “free rides”. The analysis of the welfare incidence of the opening of trade then reveals that the country which provides the public good under autarky always enjoys a welfare gain from trade while the free rider under autarky does not unless the terms of trade are sufficiently in its favour to compensate for the reduction in the supply of the common. Finally, if all countries involved in trade liberalization can without cost coordinate their supplies of the common, then the implementation of the first-best outcome is shown to be possible with a conditional Paretian transfer scheme.     

Optimal Pollution Standard in an Open Economy: Characterizing Environmental Diversity

The paper examines the optimal pollution standard for a large open economy. Using a two-country partial-equilibrium framework, the optimal standards are charaterized for autarky, free trade, and free trade together with cooperation among countries in setting standards. If pollution is local, at the free-trade equilibrium, the exporting country imposes a stricter standard than does the importing country. The ranking may be reversed if pollution is transnational. A surpriising implication is that if pollution is local, cooperation may imply a less stringent standard for both the exporting country and the importing country.     

Comparative Advantage and Economies of Scale: When Does Ricardo Dominate Smith?

This paper develops a two-country, two-sector (X and Y) model of international trade. One country has comparative advantage in the increasing returns Y-sector. The direction of trade depends on the relative size of the countries and the relative strength of economies of scale and comparative advantage. An equilibrium where the smallest country exports the Y-good and the largest country loses from trade is possible. A dynamic equilibrium where the X-sector is subject to learning by doing locks in the initial pattern of specialization. Yet, there may be few welfare gains from protecting the X-sector in the small country.     

Universal Dumping of Homogeneous Products

Contrary to predictions from traditional comparative advantage analysis, a class of models with imperfect competition predicts intra-industry trade in homogeneous goods. Brander and Krugman offer a model with two countries and one firm in each country which generates the outcome that both firms dump into the export market (reciprocal dumping). The present paper determines the extent to which higher dimensionality alters this outcome by introducing a model with several firms in each of several countries. It is shown that dumping is universal. Thus, whenever trade occurs dumping occurs.     

Economic Development,International Trade,and Income Distribution

This paper applies the inframarginal analysis, which is a combination of marginal and total cost-benefit analysis, to investigate the relationship between division of labor, the extent of the market, productivity and inequality of income distribution. The model with transaction costs and exogenous and endogenous comparative advantages shows that as trading efficiency is improved the general equilibrium discontinuously jumps from autarky to partial division of labor with a dual structure, then to the complete division of labor where dual structure disappears. In this process different groups of individuals with different trading efficiency become involved in a certain level of division of labor at different stages of development. As the leading group becomes involved in a higher level of division of labor leaving others behind, a dual structure emerges and inequality increases. As latecomers catch up dual structure disappears and inequality declines. When the leader goes to an even higher level of specialization, dual structure occurs and inequality increases again. Inequality decreases again as the latecomers catch up. Hence, the equilibrium degree of inequality fluctuates in this development process. The relationship between inequality and productivity is neither monotonically positive nor monotonically negative. It might not be an inverted U-curve. The key driving force of economic development and trade is improvement in trading efficiency. Received January 8, 2002; revised version May 2, 2002 Published online: December 5, 2002     

Trade Openness and Cross‐country Income Differences

This paper asks how variations in trade openness contribute to cross‐country income differences. We approach this question using counterfactual experiments within a quantified general equilibrium model of trade. We find that trade costs gain their relevance only by amplifying the effects of existing differences in endowments, population sizes and technologies. If, for example, market entry costs were the same in all countries, inequality would be about 13% lower. Variable trade costs are found to have a similar effect. In contrast, if countries differed only by their degree of trade openness, the resulting variance of per capita income would be negligible.     

电子信息产业国内价值链省域比较优势测度及空间差异研究

为应对后疫情时代全球电子信息产业加剧的“比较优势陷阱”,中国亟需通过国内价值链省域比较优势的互补协同提升整体国际竞争力。在价值链产品内,基于垂直专业化分工框架,兼顾增值能力与劳动生产率两个维度,使用非竞争型投入占用产出模型,设计一个评测国家内部区域电子信息产业真实比较优势的新指标。结果表明,东部沿海省域比较优势强度与广度最为显著,内陆省域比较优势集中于上游能源型部门;制造业部门比较优势凸显,服务业部门比较优势相对薄弱;比较优势高省域集中度与低省域集中度的产业部门中,均存在整体比较优势强弱差异,其中,高省域集中度产业部门比较优势强度更高。     

Specific Factors,Learning, and the Dynamics of Trade*

In the postwar period, the volume of trade among developed countries has increased at a much higher rate than GDP. This article presents a dynamic general equilibrium model of trade between developed countries that accounts for this pattern of trade dynamics. Countries trade in goods that use good‐specific skilled labor and unskilled labor as factors of production. Specific skills are learned on the job and there exist positive effects in learning. Small initial differences in the distribution of experts in each country generate an increasing pattern of specialization over time. Knowledge spillovers across sectors are crucial determinants of the trade pattern.     

National labor markets, international factor mobility and macroeconomic instability

We consider a standard two-country environment, where one of the two countries has a rigid labor market, and analyze how global economic integration affects the economies with respect to expectations-driven cycles and steady state welfare. We show that by allowing free capital mobility, equilibrium indeterminacy is exported from the rigid wage country to the world economy. If further liberalization is permitted, by allowing free movements of labor, the scope for indeterminacy is reduced and open labor markets may produce a stabilizing effect on the global macro-economy. Whether this also implies higher welfare in the long run depends on differentials in average firm size across countries, which determines the direction of migration flows.