Trade Gains and Public Goods

This paper proves that in a multicountry general‐equilibrium model of international trade with local public goods, free trade is beneficial if the governments in the trading world behave strategically with respect to the provision of public goods.     

Divergence,Convergence, and the Gains From Trade*

This paper is about a country which has enjoyed a comparative advantage in producing some good(s) and suddenly finds its trading partners increasing their productivity in producing precisely those same goods; e.g., the US with its big lead in many kinds of manufacturing production in the 1950s and 1960s, and the rest of the world catching up in the same kinds of goods in the 1970s and 1980s. This is what the paper means by “convergence.” We show that such convergence results in an absolute loss of real income and standard of living for the original “leader” country.     

Comparative Advantage With and Without Gains from Trade

In 1980, Deardorff, and Dixit and Norman, generalized the law of comparative advantage to show that the value of net imports at autarky prices (or "DDN index") is nonnegative, so that net imports are correlated with autarky prices. The DDN index can be decomposed into the sum of (i) the equivalent variation of gains from trade, and (ii) the difference in GNP at autarky prices between autarky and trade. Several examples are given of classical and neoclassical economies where (i) or (ii) can be zero. Hence gains from trade are sufficient but not necessary for the existence of comparative advantage.     

公共品私人自愿提供决策的实验研究

本文利用实验数据对公共品私人自愿提供机制的多个经典特征事实进行了实证检验,其结论基本支持诸如"公共品私人自愿供给的存在性"、"捐献率随重复捐献次数的增加而有下降的趋势"和"公共品投资的私人边际回报率和交流的正效应"等特征事实.同时,实验还得到了一些新的发现,如"期初平均捐献水平较低"、"口头协议效果显著"、"经验分享存在积极作用"和"小组的合作程度存在巨大的差异"等.这些结论说明通过合理的制度设计和安排可以达到部分公共品由私人自愿提供的目的.     

Collective Choice and Voluntary Provision of Public Goods*

Some public goods are provided entirely with private contributions, others with a mixture of public and private funding, and still others are entirely publicly funded. In order to study this variation, a model of dual provision is developed that endogenizes public and private funding. Households vote over an income tax that finances public supply of the good and on whether to permit private contributions. While permitting private contributions may lead to a reduction in total provision, a majority always favors permitting private contributions. Results are developed for small and large economies, and the relevance of nonexcludability and noncongestion are investigated.     

Environmental Policies, Comparative Advantage and the Gains/Losses from International Trade

A multihousehold economy with multilateral nondepletable externalities, environmental (output) taxation and governmental production of pure, nonexclusive and nonrivalrous public goods is assumed. Modelling many different households the "almost perfect" isomorphism between the normative analysis of public goods and environmental policies is highlighted. Globally valid necessary and sufficient conditions for gains from international trade are derived and interpreted. A simple yet general environmental policy rule ensuring trade gains is put forward. The law of comparative advantage is generalized to economies with multilateral nondepletable externalities and over or underproduced pure public goods.     

International Trade with a Public Intermediate Good and the Gains from Trade*

This paper presents a one‐primary factor, two‐consumer good, and two‐country model of international trade where each country’s government supplies a country‐specific public intermediate good so as to attain efficient production. By introducing the Marshallian adjustment process, it is demonstrated that the country with larger factor endowment exports the good whose productivity is more sensitive to the public intermediate good. Our normative analysis of free trade shows the following results. First, at least one country gains from trade. Secondly, if a country incompletely specializes in the trading equilibrium, the country necessarily loses from trade.     

Making Sense of the Comparative Advantage Gains from Trade: Comment on Batra

This paper addresses Ravi Batra’s (2002 ) criticism of the basic comparative advantage gains‐from‐trade model. While Batra’s criticism is based on the selection view interpretation of real income, the gains from trade can only be properly understood from the options view interpretation of real income. I also show how a recent empirical implementation of the gains‐from‐trade model defies Batra’s claim that “the consumption gain . . . is not subject to measurement” (2002, p. 642).     

Efficient Private Production of Public Goods under Common Agency

A private, profit-maximizing firm produces a public good that enters the utility functions of several users. Each of them separately designs and proposes to the firm a contract specifying a transfer payment as a function of the amount of public good supplied. The firm has to accept or to refuse each contract before knowing the realized value of a random variable that enters its cost function. We study the Nash equilibria of this game and explore some refinements ruling out Pareto inefficient equilibria.Journal of Economic LiteratureClassification Numbers: C72, H41.     

The Asymptotic Voluntary Provision of the Pure Public Goods

This paper analyzes the voluntary provision of the pure public good in a sequence of finite economies. The boundedness of this provision is established under very weak conditions. The Cournot–Nash provision of the public good is bounded. In contrast, the Lindahl provision is unbounded but the proportion of private good devoted to its production may be infinitesimal. Several examples are provided to relate this paper to the literature.     

从比较优势到竞争优势-中国外贸发展新视点

改革开放以来,我国进出口贸易实现了历史性飞跃,比较优势理论在我国对外经济的发展中起了重要的指导作用,但波特提出的鼓励创新,倡导竞争,发展科技的竞争优势理论,更符合当今以科技推动经济增长的新经济时代,对于我国制定对外贸易策略更具现实意义.我国应该积极的并在竞争优势的基础上调整我国的外贸发展战略:一方面通过改造传统产业,强化比较优势实现竞争优势;另一方面通过发展开放型经济培育国际竞争优势.     

Linking Absolute and Comparative Advantage to Intra-Industry Trade Theory*

Two countries, which differ with respect to domestic demand for two groups of differentiated products, are considered in a setting of monopolistic competition where international trade is subject to transaction costs. It is shown that relative differences in demand determine the trade pattern. Each country is a net exporter of that group for which domestic demand is relatively larger-where the country has a comparative home-market advantage. Absolute differences in demand determine relative wages. Thus, the paper argues that the notions of absolute and comparative advantage as found in traditional trade theory also have meaning in new trade theory.     

The Gain from International Trade in Pool Goods and Private Goods

It is well known that perfectly competitive free trade is potentially beneficial for all countries if all goods are both rivalrous and excludable in consumption (“private goods”) and recently (2011) the proposition has been modified to accommodate non‐rivalrous and non‐excludable goods (“public goods”), as well as non‐rivalrous and excludable goods (“club goods”). In the present paper the proposition is modified again, to accommodate rivalrous and non‐excludable goods (“pool goods”). The primary focus is on ocean fisheries, access to which is shared (not necessarily equally) by all countries. However the central proposition to be established is valid for all international pool goods.     

Heterogeneity and the Voluntary Provision of Public Goods

We investigate the effects of heterogeneity and incomplete information on aggregate contributions to a public good using the voluntary contribution mechanism. The non-linear laboratory environment has three-person groups as partners under varying conditions of information and communication. Bergstrom, Blum and Varian predict that increasing heterogeneity will have no effect on aggregate contributions in a no-communication environment. Ledyard conjectures a positive effect of incomplete information, a negative effect of heterogeneity, and a positive interaction of heterogeneity and incomplete information. We find that incomplete information has a small but significant negative effect. Heterogeneity has a positive effect on aggregate contributions, but its effects interact unexpectedly with communication. In a no-communication environment, heterogeneity in two dimensions (endowment and preferences) increases contributions substantially while heterogeneity in a single dimension (endowment or preferences) has little effect. In the communication environment we find the reverse. We also find a positive interaction between heterogeneity and incomplete information. Thus we reject the Bergstrom, Blume and Varian invariance result and provide mixed evidence on Ledyard's conjectures.     

Voluntary Provision of Public Goods and Technology

This paper highlights issues in the theory of voluntary provision of public goods, building on the investigation by Peacock in connection with the contributions by Coase and Buchanan. Our goal is twofold. We first draw attention to the early literature investigating the provision of public goods and to the successive theoretical analysis. We then focus on the impact of technology on supply and demand. Examples of different types of public goods are provided, with special attention to the cultural sector, to investigate whether and how technology affects the efficiency and the effectiveness of the related public goods provision. The implementation and exploitation of technological advancements are investigated in view of the role of different actors (public, private) at different levels of government.     

Gains From Trade for Nonmaterialists,Environmentalists, and the Overworked

The author proposes an alternative to the traditional definition of the gains from international trade and, hence, an alternative defense of free trade. Rather than showing that free trade allows a country to consume more of all final goods, the author's approach shows that free trade allows a country to consume the same basket of final goods that it would consume in autarchy but at a reduced cost measured in terms of foregone productive resources. Thus, free trade gives a country the option to maintain the same material standard of living that it would have enjoyed in autarchy while enjoying more leisure and using fewer natural resources in production.     

Income Distribution, Taxation, and the Private Provision of Public Goods

This article investigates the role of taxation when public goods are privately provided. Externalities between consumers via the public good are shown to cause kinks in social indifference curves. As a result, a government restricted to income taxation should engineer enough inequality to ensure there are some non-contributors to the public good. Whether commodity taxation changes this conclusion depends on the extent to which consumers "see through" the government budget constraint. If they can, inequality should still be sought. When they cannot, in contrast to the case of an economy with only private goods, commodity taxation can be used in conjunction with income transfers to achieve the first-best.     

Technology Choice,Overtaking, and Comparative Advantage*

This paper argues that the basic concept of comparative advantage, used in international trade theory to establish choices of commodities exported, can also be used to explain choice of technology by a firm. A firm with a current leading position in a given technology may spurn a new technology, which is developed by a currently lagging firm, leading to future overtaking.     

Repeated Interaction and the Public Provision of Private Goods

The literature suggests that governments can use in-kind transfers to design efficient and targeted redistribution schemes if individual incomes are not directly observable. We investigate the extent to which the self-selection property of in-kind transfers carries through if redistributive transfers are made repeatedly. In a two-period setting, the government may gain information about the individuals' incomes in the first period and exploit this information for making targeted transfers in the second-period. This, however, also triggers changes in the individuals' behavior. If the government can commit to its future policy, the least cost policy may involve randomization between cash and in-kind transfers. Without commitment, the dynamic setting works against the government's interest. It may no longer be able to use in-kind transfers to generate information about the individuals' types.
JEL classification : H 42; H 2     

Factor Endowments and the Private Provision of Public Goods

The paper examines the consequences of increasing the size of the community in the standard model of the private provision of public goods when costs are variable. In contrast to an economy with fixed costs, the provision of the public good can fall with a larger community, and an increased provision of the public good is neither a necessary nor a sufficient condition for individual utility to rise. The paper also contributes to the literature on immiserizing growth in that it shows that capital accumulation can possibly result in lower utility for all individuals.