Buyer Power,Transport Cost and Welfare

Manufacturers produce substitute products and sell to consumers in a linear city through competing retail stores. A low cost store obtains large market share by selling at low prices. Assume that a big retailer may exert buyer power by demanding wholesale discounts from manufacturers. The model identifies exclusionary effects of buyer power against competing retailers. It is also found that certain level of buyer power of a discount retailer may maximize social welfare, while that of a regular price retailer may maximize total consumer surplus. Nevertheless, excessive buyer power hurts both consumers and society.     

Trade and industrial location with heterogeneous labor

It is shown in the context of a new economic geography model that when labor is heterogeneous trade liberalization may lead to industrial agglomeration and inter-regional trade. Labor heterogeneity gives local monopsony power to firms but also introduces variations in the quality of the job match. Matches are likely to be better when there are more firms and workers in the local market, giving rise to an agglomeration force which can offset the forces against, trade costs and the erosion of monopsony power. A robust agglomeration equilibrium is derived analytically and its properties illustrated with numerical simulations.     

Trade liberalization and the allocation of labor between households and markets in a poor country

We consider the relationship between relative price changes and the allocation of labor between households and the formal wage labor market in the context of Vietnam's liberalization of its rice trade in the 1990s. Many individuals in poor economies work within their own household rather than in formal labor markets. We find that larger rice price increases in a community are associated with declines in hours adults devote to work within the household and increases in time spent in the wage labor market. We also observe increased specialization in household economic activities accompanying these shifts in hours towards wage work. Our results are consistent with the idea that a growth in the extent of the market shifts production and labor from households to markets during development, thereby inducing gains from specialization. Thus, the reallocation of labor between households and markets in response to a trade liberalization might be an important component in understanding the link between trade and growth in very poor economies, currently the focus of the Doha WTO negotiation round.     

Labor demand and trade reform in Latin America

Trade liberalization is thought to result in higher own-wage elasticities of labor demand, particularly for unskilled labor, with adverse implications for both labor market volatility and wage dispersion. The paper first argues that theoretically the link between liberalization and labor-demand elasticities is less clear than has previously been asserted. It then uses dynamic panel techniques to estimate labor-demand relations for manufacturing establishments in Chile, Colombia, and Mexico across periods of trade policy reform. The results do not strongly support the hypothesis that trade liberalization has a direct impact on own-wage elasticities.     

零售商买方势力理论研究述评

随着零售业集中化趋势不断增强和大型零售商不断涌现,零售商买方势力日益突出.买方势力问题已经受到了理论界和产业界的高度关注.文章梳理了买方势力理论研究的主要成果,从买方势力的内涵、形成因素、经济效应和政府规制等几个方面系统地阐述了买方势力理论的研究进展,并对未来的研究方向进行了展望.     

Bilateralism, multilateralism, and the quest for global free trade

We develop an equilibrium theory of trade agreements in which both the degree and the nature (bilateral or multilateral) of trade liberalization are endogenously determined. To determine whether and how bilateralism matters, we also analyze a scenario where countries pursue trade liberalization on only a multilateral basis. We find that when countries have asymmetric endowments or when governments value producer interests more than tariff revenue and consumer surplus, there exist circumstances where global free trade is a stable equilibrium only if countries are free to pursue bilateral trade agreements. By contrast, under symmetry, both bilateralism and multilateralism yield global free trade.     

Buyer Power and its Impact on Competition in the Food Retail Distribution Sector of the European Union

In recent years, there has been significant consolidation and concentration in food retail distribution in the European Union, as our paper documents. We examine the implications of this from the social welfare viewpoint. Our focus is on buyer power, since a commonly held view is that, arising from increased concentration, it may be a buffer to significant manufacturer power. We investigate the issue both theoretically and through data and case study work. We suggest the market will develop into a concentrated pattern across Europe, but that the eventual impact on consumers will depend significantly on the nature and form of competition between large retail chains and how well buying groups ensure that even the smaller retailers can compete on an effective basis.     

电信服务贸易自由化的经济效应研究综述

GATS框架下的电信多边谈判使世界电信市场的开放进程有了明确的时间表,它通过督促各国积极实践电信承诺来推进电信服务自由化。电信服务贸易自由化不仅促进各国电信服务的相互渗透,而且有利于电信服务消费者福利的改善。电信市场开放以来取得的巨大成就显示了服务贸易自由化对经济的重要作用。     

Innovation and trade with heterogeneous firms

This paper examines how trade liberalization affects the innovation incentives of firms, and what this implies for industry productivity. For this purpose we develop a reciprocal dumping model of international trade with heterogeneous firms and endogenous R&D. Among the robust results that hold both in the short run when there is no entry, and in the long run under free entry are that trade liberalization increases aggregate R&D when trade costs are low and decreases R&D when trade costs are high. Expected industry productivity rises as trade costs fall.     

市场潜力、贸易自由化与地区工资差距

在新经济地理学的框架下,本文构建理论模型研究市场潜力和贸易自由化与地区工资差距的关系,根据中国1993－2012年的省际面板数据,采用工具变量二阶段最小二乘法实证检验市场潜力和贸易自由化对地区工资水平的影响效应。研究结果表明,市场潜力和贸易自由化对地区工资水平均有显著为正的影响作用,且二者还存在替代关系。进一步的分析发现,贸易自由化程度较高的沿海地区,其市场潜力对地区工资水平的影响较小,而在内陆地区则恰好相反。     

The effect of trade liberalization on child labor

The question of how trade liberalization affects the employment of children in developing economies is at the core of the debate on globalization. Trade theory predicts that an increase in the price of an exported good could either increase or decrease child labor depending on the magnitudes of the substitution and income effects. In this paper, we study the relationship between changes in the relative price of an exported commodity and child labor using household-level data from within a poor country. In particular, we relate child labor to regional and intertemporal variation in the real price of rice surrounding national and international rice market integration in Vietnam. We find that higher rice prices are associated with declines in child labor. Income effects play an important role in this relationship. Rice price increases are associated with the largest declines in child labor in households that are large net producers of rice. These findings show that greater market integration can be associated with less child labor. Moreover, our results suggest that the use of punitive trade sanctions on exports from developing countries to eradicate child labor is unlikely to yield the desired outcome.     

Trade liberalization and the evolution of skill earnings differentials in Brazil

Skilled labor earnings differentials decreased during the trade liberalization implemented in Brazil from 1988 to 1995. This paper investigates the role of trade liberalization in explaining these relative earnings movements. We perform several independent empirical exercises that check the traditional trade transmission mechanism, using disaggregated data on tariffs, prices, earnings, employment and skill intensity. We find that: i) employment shifted from skilled to unskilled intensive sectors, and each sector increased its relative share of skilled labor; ii) relative prices fell in skill-intensive sectors; iii) tariff changes across sectors were not related to skill intensities, but the pass-through from tariffs to prices was larger in skill-intensive sectors; iv) the decline in skilled earnings differentials mandated by the price variation predicted by trade was even larger than the observed one. The results are compatible with trade liberalization accounting for the observed relative earnings changes in Brazil. They also highlight the importance of considering the effects of differentiated pass-through from tariffs to prices.     

Antitrust and Liberalization in developing countries

A number of developing countries around the world have recently liberalized once highly protected regimes through privatization programs and by reducing impediments to market trade. Many of these countries have adopted an antitrust policy as an integral component of their market reforms. Recent assessments of trade liberalization programs show disappointing results. Such outcomes contradict long-held beliefs that free trade is sufficient to generate competitive outcomes in small economies. Antitrust advocates view these underwhelming achievements as further justification for extensive antitrust enforcement. We argue instead that the failure of liberalization suggests not the correctness but the inappropriateness of the enactment of antitrust policies. The continuance of market power after liberalization is due primarily to lobbying activities by producer interest groups to establish nontariff barriers rather than to collusive practices among producers. Interest groups find cartelization and rent seeking as substitutes in raising prices above competitive levels. Accordingly, the establishment of antitrust serves to improve the relative attractiveness of seeking nontariff barriers. Antitrust policies are ineffective in challenging the emergence of nontariff barriers and thus may have the unintended consequence of promoting anticompetitive activities.     

Escaping a protectionist rut: Policy mechanisms for trade reform in a democracy

This paper analyzes the dynamics of trade policy reform under democracy. In an overlapping generations model, heterogeneous agents may acquire skills when young thereby determining the skill composition of their cohort. Current and anticipated trade policies influence education decisions and thus voters' trade policy preferences. We show that there may exist two political steady states: one protectionist and one liberal. Transition from the former to the latter can be achieved by government announcements, temporary educational subsidies, or tariff liberalization by trading partners, but generally not by transfer payments to adversely affected workers. We find additionally that reform is politically feasible only if the proposed liberalization is sufficiently large, suggesting that radical reform may be necessary for escaping a protectionist political rut.     

Exclusive dealing and common agency in international markets

This paper investigates the contractual choice between exclusive dealing and common agency in a simple international oligopoly model where products are sold through intermediaries. We find that when trade barriers are high, domestic firms tend to adopt exclusive dealing contracts whereas trade liberalization may lead firms to choose common agency. Social welfare can be raised be prohibiting exclusive dealing (common agency) when trade barriers are high (low) and products are close substitutes.     

哈尔滨大型零售企业发展中存在的问题及对策分析

我国加入WTO后,零售行业逐步开放,许多大型国际连锁超市纷纷涌入哈尔滨,使得零售行业竞争更加激烈。新的零售业态虽然给当地消费者带来了全新的消费方式和购物模式,但也给本地零售业带来前所未有的冲击。哈尔滨大型零售企业存在运行机制不灵活,管理运作不规范,零售业态单一,连锁业态组织化程度低,企业规模小,市场份额低等问题。政府应兼顾服务贸易自由化和发展我国零售业的双重目标,尽快健全零售领域的法律、法规体系,推动企业机制转换,规范管理运作,积极开展新型零售业态,进行战略资源整合,以扩大市场份额。     

The effect of foreign trade and investment liberalization on spatial concentration of economic activity

I examine the varying responses of countries to foreign trade and direct investment liberalization on spatial concentration of their economic activity by taking into consideration moderating factors such as their market size and level of economic development. I argue that liberalization increases the concentration under normal conditions but large market size, and underdevelopment can disperse economic activity. Using data from 168 countries for the period of time starting in 1980s, I found support for all hypotheses.     

External tariffs under a free-trade area

How do free-trade areas affect the tariffs that member countries impose against non-members? There is no consensus in the literature regarding this important question. In this study, we use a political-economy model of endogenous protection to show that if individual preferences exhibit loss aversion or if the government's objective is characterized by diminishing marginal political support, a free-trade area can lead member countries to increase their external tariffs and thus act as a stumbling block to unilateral liberalization. We also argue that the stumbling block result is more likely to arise under loss aversion than under diminishing marginal political support and confirm this using a simulation. Finally, we show that the stumbling block effect can also take place under multilateral liberalization. Our results highlight a new type of mechanism through which preferential trade agreements may affect external tariffs.     

Welfare implications of trade liberalization and fiscal reform: A quantitative experiment

This paper studies the welfare implications of revenue-neutral trade liberalization and fiscal reform programs for developing economies using a multi-sector dynamic general equilibrium model of a small open economy. We analyze how different combinations of tariffs – on imported consumption goods, intermediate inputs, and capital goods – and taxes – on consumption, labor income and capital income – affect the transitional and long-run welfare. We report three main findings. First, trade liberalization programs financed by consumption and labor income taxes tend to result in substantial welfare gains, but financing the lost tariff revenue through capital income taxes can have an adverse impact on welfare. Second, a significant fraction of welfare changes is due to transitional effects stemming from the allocation of resources in response to changes in tariffs and taxes. Third, trade liberalization and fiscal reform programs often translate into much larger welfare gains in countries that are more open to international financial markets.     

Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico

In this paper, I study what factors determined the changes in Mexico's regional wage differentials during the nineties. I exploit the regional variation in exposure to international markets to identify the effects of NAFTA on wages and the skill premium. The results support the presence of Stolper-Samuelson type of responses during Mexico's trade liberalization: regions more exposed to globalization appear to have exhibited an increase in overall wage levels, but a decrease in the skill premium, relative to other regions of the country. The results suggest that trade liberalization has a spatial dimension that is usually neglected in traditional models.