International Capital Mobility and the Costs of Us Import Restraints*

Abstract This paper evaluates general equilibrium welfare effects of tariffs, quotas, and voluntary export restraints under different assumptions about international capital mobility. We show analytically that, when induced terms-of-trade and rental-rate effects are considered, the qualitative influence of capital mobility on the costs of protection cannot be ascertained unambiguously. Simulation estimates for the US indicate the practical importance of capital mobility, as well as of terms-of-trade and rental-rate adjustments, in determining the ultimate welfare effects of import restraints.     

The Choice of Optimal Protection under Oligopoly: Import Tariff v. Production Subsidy

Economists researching the area of optimal protection have tended to analyse the ranking of alternative policy tools in the presence of perfect competition, either when the government in an importing country achieves a non-economic target, or when there is a market distortion. Assuming international oligopolistic competition, I reconsider the choice of optimal policy instruments, i.e. an import tariff and a production subsidy. I show that the choice of optimal policy instruments depends on the relative number of home firms and foreign ones and on the magnitude of international cost differences.
JEL Classification Numbers: F12, F13.     

Coordination in Oligopoly

The private and social efficiency of two "behavioral" coordination mechanisms is examined in this paper. In Cournot oligopoly, firms prefer immediate coordination on the Nash equilibrium (interpreted as a preplay communication) over the best-reply dynamics (and fictitous play) which converge to the equilibrium, but with delay (interpreted as a decentralized learning process). In Bertrand oligopoly, firms prefer the learning process. These results indicate that firms have incentives to create institutions, such as trade associations or informal meetings, to facilitate coordination of production capacities, but not prices. Moreover, quantity agreements may even increase social welfare.     

Oligopoly and entry

This paper investigates the price and nonprice response of a wealth-maximizing leader firm under threat of entry, taking into account the effects of “learning” through cumulative output. The important characteristic of all the comparative statics results is that along the equilibrium trajectory, price and demandincreasing cost expenditures (capitalizable and noncapitalizable) are “substitutes” in the current contribution to wealth, and demand-increasing cost expenditures are “complements” in the current contribution to wealth. That is to say, an increase in price decreases the marginal contribution of demandincreasing cost expenditures to the current contribution to wealth such that to keep the current contribution to wealth constant, expenditures on demandincreasing costs must fall; and conversely, for a price reduction.     

Oligopoly Power in British Industry

In this paper a model of industrial behaviour, encompassing factor demand and output supply decisions by industries, is developed and then estimated for ten industries in the United Kingdom over the period 1954–79. The derivation of the provides, within a consistent framework, insight into conjectural variation, Lerner's index of monopoly power, measures of industrial concentration and thereby makes explict the notion of oligopoly power. The estimates provide an empirical basis for evaluating the structure of industry in the United Kingdom and the estimated measures of oligopoly power are finally compared with more conventional measures of industrial concentration.     

Information Advantage in Cournot Oligopoly

Consider an oligopolistic industry where firms have access to the same technology but are asymmetrically informed about the environment. Even though it is commonplace to think that in this context superior information leads to higher profits, we find that under Cournot competition this is not generally the case: It holds when firms' technology exhibits constant returns to scale, but it does not necessarily hold otherwise. Journal of Economic Literature Classification Numbers: C72, D43, L13.     

Oligopoly and derived demand

In this paper, a formula relating elasticity of demand for a factor to elasticity of final product demand, elasticity of substitution and share of the factor in cost of production is derived for the case of an oligopolistic industry.     

Oligopoly equilibria in electricity contract markets

This paper examines the implications of forward contracting on oligopoly environments by extending the model of Allaz and Vila to an environment with multiple firms and increasing marginal cost. Estimates of key parameters of this model are taken from existing electricity markets to predict the market impact of one round of public contracting, such as those seen in auctions for retail provision and resource procurement. The results imply that, when forward contracts are present, the importance of supplier concentration is greatly magnified relative to other determinants unilateral market power such as demand elasticity.      

企业家约束:自我约束、外在约束与制度约束

企业家是指直接经营企业并且在很大程度上决定企业命运的经营者.企业家约束有自我约束与外在约束之别,其中外在约束有表现为企业内部的财产关系约束和组织关系约束以及企业外部的市场关系约束,因此,企业家约束实际上主要是一种建立在相关利益关系博弈过程基础上的制度建设.     

Entry Deterrence in a Unionized Oligopoly

We investigate wage determination between an incumbent firm and its labour union under threat from another firm entering its product market. In equilibrium, it may be optimal for a labour union of the incumbent firm to lower its wage demand. This may make it possible for the incumbent firm to maintain a higher employment level, in that the lower wages can help the firm deter the entry of a rival firm. This will yield a higher profit for the incumbent firm and a lower utility level for the labour union compared with those in an equilibrium with no threat of entry.
JEL Classification Numbers: J51, L10     

Partial Privatization in a Differentiated Mixed Oligopoly

A model of differentiated mixed oligopoly is developed to systematically discuss the welfare consequences of partial privatization of a public firm. We analytically derive the optimal degree of partial privatization not only in the short run with restricted entry but also in the long run with free entry. It is shown that the short-run optimal policy is non-monotonic in the degree of love of variety, while the optimal degree of privatization is monotonically increasing in the consumer's preference for variety in the long run.      

Cartel Stability in a Delivered Pricing Oligopoly

Using the spatial price discrimination framework, the relationship between the locations of firms and their ability to collude is investigated. Gupta and Venkatu (2002) show that in a duopoly model agglomeration at one point is the most stable location. We find that agglomeration stabilizes the cartel when there are three firms, too. When there are more than three firms, however, agglomeration of all firms is never the most stable location. With four firms, the following location pattern produces the most stable cartel: two firms at one point and the other two at the farthest point from the first two.     

Vertical Restraints and Market Access

This paper analyzes vertical restraints in relation to market access issues. In Section II we briefly review the recent three major trade conflicts between Japan and the USA in light of vertical restraints. In Section III we review the major policy lessons of the economics literature of vertical restraints, and analyze whether we need a special treatment for vertical restraints abroad for a market access reason. In Section IV we evaluate the policy options towards foreign foreclosure and suggest that nondiscriminatory application of foreign or home competition policy should be the mechanism to address such concern instead of trade policy actions such as voluntary import expansions.     

Mixed Oligopoly and Environmental Policy

We show in this paper that when there are both public and private firms in product markets (a mixed oligopoly) the decision whether to privatize a public firm interacts with the environmental policy of governments. Therefore, the outcome of the decision whether to privatize a public firm may be different if the government internalizes the environmental damage than if the government ignores it. When the government sets a tax to protect the environment, the tax is lower in the mixed oligopoly than in the private one even though the environmental damage is greater. In the mixed oligopoly the marginal cost of the public firm is lower than the market price.     

Demand-Creating R&D in a Symmetric Oligopoly

Spillovers with demand-creating research and development (R&D) activities are investigated by revisiting a widely employed market share rivalry demand structure. Positive technological spillovers may inflict positive or negative side effects on rivals and this has important implications for the effects on innovative efforts of loose or tight R&D cooperation in symmetric oligopolies. A comparison with the effects that apply with linear demand structures and implications for empirical research are also touched upon.     

Imitation and Belief Learning in an Oligopoly Experiment

We examine the force of three types of behavioural dynamics in quantity–setting triopoly experiments: (1) mimicking the successful firm, (2) rules based on following the exemplary firm, and (3) rules based on belief learning. Theoretically, these three types of rules lead to the competitive, the collusive, and the Cournot–Nash outcome, respectively. In the experiment we employ three information treatments, each of which is hypothesized to be conducive to the force of one of the three dynamic rules. To a large extent, the results are consistent with the hypothesized relationships between treatments, behavioural rules, and outcomes.     

Asymmetric Regulation of Identical Polluters in Oligopoly Models

Studies of optimal second-best environmental regulation of identical polluting agents have invariably ignored potentially welfare-improving asymmetric regulation by imposing equal regulatory treatment of identical firms at the outset. Yet, cost asymmetry between oligopoly firms may well give rise to private as well as social gains. A trade-off is demonstrated for the regulator, between private costs savings and additional social costs when asymmetric treatment is allowed. Asymmetry is indeed optimal for a range of plausible parameter values. Further, it is demonstrated that for a broad class of abatement cost functions, there is scope for increasing welfare while keeping both total output and total emission constant. Some motivating policy issues are discussed in light of the results, including international harmonization and global carbon dioxide reduction.     

A Stackelberg Oligopoly with Nonidentical Firms

This paper extends the Stackelberg model to include any number of nonidentical firms and demonstrates significant counterintuitive results. For example, entry of an additional firm may increase the quantities and/or profits of some existing firms; it may also increase the total industry profit.