Testing the Alchian–Allen theorem for three goods using the pseudo Poisson model

We show that the Alchian–Allen theorem holds in three‐good world. We empirically test the theorem by examining the relative demand for three quality‐differentiated coffee varieties sold globally and confirm that a common per‐unit charge increases the overall quality of coffee demanded. Our empirical specification employs the Poisson pseudo maximum likelihood method, which prevents sample selection bias when zero flows between country pairs occur and estimated parameter inconsistency when the data exhibit heteroscedasticity. This is a significant improvement compared to previous practice of using the ordinary least squares to estimate the log‐log formulation, which led to both biased and inconsistent parameter estimates.     

What is the role of innovation in productivity growth in Central and Eastern European countries?

The paper uses company level data from the Eurostat's Community Innovation Survey 2008 and applies CDM model in order to estimate the links between R&D engagement, R&D intensity, innovation output and productivity in selected Central and Eastern European Countries – Bulgaria and Romania, and compares their performance with Germany. The results showed that different processes drive company's decision to engage in R&D in Bulgaria and Romania in comparison to Germany; R&D intensity is an important factor of product innovation in the observed CEE countries and product innovation leads to higher productivity in Bulgaria and Romania, while process innovation leads to higher productivity in Bulgaria, but not in Romania.     

Passive partial ownership,sneaky takeovers,and merger control

We analyze the impact of passive partial ownership (PPO) on horizontal mergers. We show that antitrust authorities ignoring the effects of previous PPO acquisitions invite sneaky takeovers: a PPO is strategically used prior to a full takeover to get a merger approved which is in fact detrimental to consumers.     

International organizations and arrangements: Pivotal countries and manipulations

A problem of making an investment in a large developing or transition economy by an international organization is considered in this paper. We design a dominant strategy (the truth-telling) mechanism in a decision making problem where both Pareto optimality and optimization of an international organization's welfare are achieved. We determine that if there are pivotal countries within an international organization, necessary assumptions made for such a mechanism to work cannot be all satisfied. The mere presence of pivotal countries within an international organization is an empirical question, but casual empiricism suggests their existence.     

International stock market integration: Central and South Eastern Europe compared

We examine the international stock market comovements between Western Europe vis-à-vis Central (Czech Republic, Hungary and Poland) and South Eastern Europe (Croatia, Macedonia and Serbia) using multivariate GARCH models in the period 2006–2011. Comparing these two groups, we find that the degree of comovements is much higher for Central Europe. The correlation of South Eastern European stock markets with developed markets is essentially zero. An exemption to this regularity is Croatia, with its stock market displaying a greater degree of integration toward Western Europe recently, but still below the levels typical for Central Europe. All stock markets fall strongly at the beginning of the global financial crisis and we do not find that the crisis altered the degree of stock market integration between these groups of countries.     

Income effects on the trade balance in small open economies

The objective is to determine the causes of the countercyclicality of the trade balance in five small open economies, namely Austria, France, Italy, Spain, and Switzerland. In order to investigate the role of permanent and temporary changes in income in the determination of the trade balance, Blanchard-Quah variance decomposition procedure is applied. The results of analysis support the conclusion that transitory income shocks are major reasons for the change in the trade balance, and that negative correlation between the trade balance and income is primarily due to transitory shocks. Thus, these results are more consistent with intertemporal models with the dichotomous view in which the aggregate demand shocks are responsible for cyclical variations in the trade balance and income and aggregate supply is responsible for the long-run growth of the economy.     

Determinants of obesity in Brazil: the effects of trade liberalization and socio-economic variables

This article aims to evaluate a possible relation between increased Brazilian trade openness and increasing observed rates of overweight and obesity during the last 25 years. We develop an economic model where formal trade barriers are eliminated, and resulting sociocultural outcomes such as the adoption of westernized lifestyle in traditional non-western countries prevails, which could imply a health externality. In order to empirically analyse the influence of trade flows on overweight and obesity in Brazil, a balanced fixed-effects panel model has been estimated. Data for the 26 Brazilian states plus the Federal District are run for 1988/1989, 2002 and 2008. We found that an increase in trade openness leads to an increase in overweight and obesity ratios in Brazil. Hence results seem to point that there is a health externality in Brazil due to trade liberalization. However, more consistent evidence may be necessary to convince politicians and policymakers that any interference will be necessary to correct this externality.     

Towards a Characterization of Second-Best Pure Strategy Solutions to a Smooth and Symmetric Partnership Problem

This article makes a start in characterizing the second-best solution to a smooth, symmetric partnership problem. It derives a more tractable formulation of the problem using a modified version of the condition in Legros and Matthews (1993). Then it uses this formulation to show that the second-best solution will depend crucially on the curvature (third derivatives) of the production and disutility schedules. Moreover, it shows that the residual claimant solution will be second-best for sufficiently large partnerships.     

Market integration in US gasoline markets

This paper analyses the degree of market integration in the retail gasoline markets in the United States after it was completely deregulated in 1981. The monthly average prices of unleaded regular gasoline, excluding taxes, from January 1983 to December of 1998 for five US Petroleum Administration Defense Districts were considered in the analysis. There is evidence of a high degree of market integration in the gasoline markets as evidenced by the Engel and Granger and Johansen cointegration tests, but perfect market integration is rejected in all but a few cases.