Impact of data trade restrictions on IT services export: A cross-country analysis

Trade in digital goods and services have witnessed increasing growth in recent years, accompanied by a corresponding increase in data flows across national boundaries. At the same time, governments around the world have enacted data policies that restrict such cross border data flows in their effort to claim sovereignty over data generated from within their countries. However, scholars have long proclaimed that any restrictions to the Internet and associated digital trade will have serious economic consequences. Given this context, we analyze the impact of data policies that impose restrictions on digital trade, specifically on cross border data flows. We construct Market Data Restrictions Index (MDRI), that measures the data restrictions faced by an exporting country from their trade partners. We use a variation of random effect model on a panel data set consisting of 60 countries that contribute to more than 50 percent of IT services export during the period 2006–2017. The results indicate that apart from variables such as Foreign Direct Investment, and Service Value Added, the MDRI of partner countries has a moderate negative effect on IT services export. If countries move from liberal policies to stringent data restrictions, the economies of the country that exports its ICT services to these partner countries is affected substantially. Hence government regulators shall be cautious in imposing stringent data restrictions as it affects global digital trade.     

Transaction costs and competition policy

This paper evaluates current antitrust policy in light of our current understanding of how transaction costs influence the ability of firms and consumers to deal with market power. The paper shows how the failure to consider transaction costs can lead to erroneous policy decisions. Many models employed today make simplifying assumptions about transaction costs that can lead to biased results in analyzing vertical and horizontal issues. The increased ability to monitor the effect of promotional behavior should cause us to reexamine whether free riding justifications, previously accepted as justifications for various vertical restrictions, still hold. Nash bargaining and Nash-in-Nash models raise concerns about the simplified assumptions assumed in which supposedly high transaction costs restrict the choice and form of the assumed competitive alternatives. The increasing importance of two-sided markets together with an understanding of transaction costs is needed to understand antitrust conduct in those markets. The recent Amex case is likely to lead to confused litigation in these types of markets. Finally, the establishment of property rights for a consumer to his or her data could fail to remedy antitrust concerns that certain dominant firms are immune to competition because consumers do not own their data unless that property right is limited so that consumers cannot exclusively sell their data to one firm.     

The effects of personal information on competition: Consumer privacy and partial price discrimination

This article studies the effects of consumer information on the intensity of competition. In a two dimensional duopoly model of horizontal product differentiation, firms use consumer information to price discriminate. I contrast a full privacy and a no privacy benchmark with intermediate regimes in which the firms can profile consumers only partially. I show that with partial privacy firms are always better-off with price discrimination: the relationship between information and profits is hump-shaped. In particular, competing firms prefer to target consumers with partial but asymmetric information about preferences. Instead, consumers prefer either no or full privacy in aggregate, but the effects of information on individual surplus are ambiguous: there are always winners and losers. Finally, I study the information acquisition incentives of the firms when there is an external data seller. When this upstream data broker holds partially informative data, an exclusive allocation arises. Instead, when data is fully informative, each competitor acquires consumer data but on a different dimension. These findings are relevant for the strategic decisions of firms active in digital markets and contribute to the policy debate surrounding privacy, exclusive access to data and competition.     

Price competition when three are few and four are many

I examine price competition in a market for a homogeneous good when consumers observe prices subject to a random shock (perception error). When firms have symmetric costs, there exists a unique equilibrium in pure strategies, which is symmetric. When there are up to three sellers in the market, the sellers extract the entire consumer surplus. However, with at least four firms, assuming that the marginal cost is sufficiently low relative to consumers’ valuation, both consumers and producers may enjoy a positive surplus. The marginal-cost pricing is never observed in an equilibrium with finitely many firms. Potential policy implications are discussed.     

Strategic procurement, openness and market structure

We examine strategic procurement behaviour by governments and its effect on market structure in sectors, such as defence and pharmaceuticals, where the government is the dominant consumer. In a world economy with trade between producer countries, and between producers and non-producers, we use a modified Dixit–Stiglitz utility function with an independent taste for variety. There is free entry and exit by firms, but by anticipating their participation constraint governments can indirectly choose the number of domestic firms and their size through its choice of procurement price. Unlike the standard model with no independent taste for variety and no external sector of non-producer countries, there are incentives for subsidies, openness impacts on industrial structure and procurement coordination between producer countries affects firm numbers.     

Consumer information,labelling and international trade in agri-food products

The focus of the World Trade Organization is establishing limits on governments’ ability to impose trade barriers in response to producers’ requests for protection. In recent years, however, requests for protection from imports has increasingly come from consumers over issues ranging from animal welfare concerns, employment of child labour, the use of growth hormones, differing environmental standards and GM foods. The current international trade regime is ill-suited to deal with consumer-based protectionism. This paper develops a model that explicitly incorporates consumer concerns into an international trade model and compares the result with the standard treatment. Further, using the model incorporating consumer concerns, a labelling policy for imports is compared to an import embargo. The labelling policy is found to be superior to an embargo. Implications are drawn for future trade negotiations pertaining to sanitary and phytosanitary measures and technical barriers to trade.     

An economic analysis of the impacts of trade liberalization on Asian dairy market

This paper develops an economic analysis of the impacts of further trade liberalization scenarios on Asian dairy markets, using a world dairy model incorporating both vertical and spatial characteristics of the world dairy sector. Japan and Korea’ producers will suffer much bigger losses from trade liberalization than other countries in the region; Japan and Korea’s producers get much more protection from trade distortions than from domestic subsidy. India is a potential competitive exporter if Asia is liberalized. China and India are potential competitive exporters under global free trade. South East Asia and other South Asian countries remain importers under free trade. Greater trade liberalization around the world increases exports for potential exporters and/or ease importing pressure for potential importers. The increasing order of competitiveness of Asian dairy economies sectors is found to be Japan, Korea, South East Asia, other South Asia, China and India. China and India consumers would lose from world trade liberalization, but the other countries’ consumer surplus will increase.     

消费契约的双重特性与大企业危机

消费契约具有长期契约特征，不但企业对消费者的购买激励具备投资特征，消费者也会在购买过程中形成专用性资产。通过转移成本壁垒，企业和消费者被封闭在一种双边的长期契约关系当中，这种关系造成了消费契约的相对稳定性。但同时由于契约的不完全性，一旦消费者预期专用性资产变为沉没成本，潜在消费者将转投其他企业，造成企业的迅速倒闭。如果大企业不能采取有效措施，小的失误可能会演变成大的危机；由于大企业存在着危机的外部性．因此需要相应的公共政策。     

Consumer preferences and the international harmonization of organic standards

Harmonization of technical standards is often advocated as a means to remove technical barriers that reduce the welfare gains available from international trade. Organic standards are not currently harmonized internationally. If domestic organic standards reflect consumer tastes, and consumers have strong preferences for those standards, then harmonization to a common standard may reduce the benefits consumers receive from organic products. Through a consumer survey, conjoint analysis was used to explore the preferences of consumers in the US, the UK and Canada for organic food. The results suggest that consumers in the three countries do not have a strong attachment to the current national organic standards and that international harmonization may be a legitimate food policy goal.     

How far down the path to free trade? The importance of rice price stabilization in developing Asia

International trade agreements are pushing the world in the direction of free trade. But price stabilization, which is inconsistent with completely free trade, remains important in developing Asia because of the large share of rice in economic output. A policy of pure price stabilization for rice, without consistent protection (either subsidization or taxation), can help to create the macroeconomic stability that is essential for sustained rapid economic growth by increasing the quantity and efficiency of investment throughout the economy. Pure price stabilization can also generate significant equity gains by protecting poor consumers and farmers from sharp fluctuations in prices. While domestic commodity price stabilization schemes have a checkered history around the world, the experience of Asian countries in stabilizing rice prices offers more scope for optimism. Asian governments have been generally successful in stabilizing rice prices, and there are several instances where this has been accomplished without sustained protection of either consumers or farmers. However, there is room for improved stabilization mechanisms that would lower the costs of intervention.     

A protectionist foodgrain price policy : The case of rice in Panama

Panama has pursued a protectionist price policy for rice, with domestic prices well above the world market level. The government marketing authority purchases sufficient rice to support the established price level and stores or exports the surplus. Although producers benefit, this policy imposes significant costs on consumers, government expenditures and economic efficiency. One policy recommendation is to bring domestic prices in line with the international level. Although free trade is one possibility, a market stabilization programme could be retained. At a minimum Panama's rice price should reflect domestic demand and not production costs. The unfavourable rice-fertilizer price ratio also deserves attention.     

Consumer Resistance to Innovation in Services: Challenges and Barriers in the Internet of Things Era

The Internet of Things (IoT) is expected to be the next phase of the Internet revolution and to transform consumers’ service experience. It nevertheless raises challenges on innovation in services. Based on Ram and Sheth's ( 1989 ) theoretical framework, this work attempts to provide a better understanding of the barriers that lead to consumers’ resistance to smart services as an innovation. To this end, our research adopts an integrative framework that combines functional barriers, psychological barriers, and individual barriers to explain consumer resistance to smart services. Structural equation modeling was used to test this theoretical framework. Our research enriches the existing literature by (1) adapting Ram and Sheth's ( 1989 ) theoretical framework to the evolution of digital technologies (technological vulnerability barriers), (2) taking into account the ideological aspect of resistance (ideological barriers), and (3) considering dispositional variables (individual barriers). Moreover, it highlights the key role of skepticism toward IoT devices as a mediator between technological vulnerability barriers and individual barriers on the one hand and consumer resistance to smart services on the other.     

An improved maize marketing system for African countries: the case of Zimbabwe

This article proposes a system for Zimbabwe which retains government control of national stocks and enables the parastatal marketing system to stabilize prices, at the same time ensuring a more rational delivery system in rural areas with prices reflecting storage and transport costs. The local population is encouraged to fulfill local needs, thus avoiding the expense of directing all marketing and processing through the urban areas. A more localized system will also have greater multiplier effects. Zimbabwe's maize marketing system is used to show how this system could be modified with benefits to rural consumers, producers and government. Data suggest there is little market exploitation: price differentials between markts reflect transport costs, returns on storage are reasonable, and voluntary procurement operations are usually able to stabilize prices. Zoning, movement restrictions and compulsory procurement have been shown to destabilize food markets; prices between markets are higher in periods of strict control than when marketing is relatively free. Controlled marketing answers a real political and economic need in Zimbabwe. Existing public food marketing agencies are not inherently inefficient. While stabilizing maize supply, there are important advantages in announcing preplanting prices, but any trade in maize only takes place after price setting. It is unlikely that there would be both imports and exports in any 1 year, except when previous contracts are being fulfilled. 2 policy options are available to cover anticipated periods of insufficient national maize production: the maintenance of a strategic reserve; and importation of maize to cover supply shortfalls. Single-channel marketing should be replaced by an internal free market operating between floor and ceiling prices by supply manipulation to prevent excessive producer and consumer welfare fluctuations. This system would be more efficient and have beneficial effects on development. It is more equitable for the rural poor, and result in greater stability of producer incomes, more reliable food supplies, higher producer prices and the release of public funds.     

Symbiotic production: The case of telecommunication pricing

In this paper we analyze a generalization of vertical monopolies in which monopoly suppliers trade essential inputs with one another. The most obvious applications of the model, which we call symbiotic production, are to postal and telecommunications services. We show how producers can use per-unit tariffs to achieve cooperative outcomes without colluding directly over consumer prices. We then show the firms have an incentive to collude in the setting of tariffs but that suchcollusion will lower consumer prices. This assumes that the suppliers are otherwise unfettered. In contrast, if the constituent monopolies are regulated, we show that collusion enables the firms to completely undo the restraints of regulation. The model has important policy implications for the international telecommunications market.     

贸易媒介、定价格局与国际石油市场演变——对石油史的新阐释

通过引入贸易媒介的三分法贸易商品定价分析框架,阐述生产者、贸易媒介和消费者等推动市场结构和定价格局变动的机理,并从生产者-贸易媒介以及贸易媒介-消费者两个环节的定价博弈出发,尝试性地对国际石油市场及定价格局的演变进行分析.阐释了现代石油工业150年历史中重大政治经济事件的经济涵义和各阶段国际石油市场格局演变的主要特征,并分析了在期货市场体系中,产油国、石油公司及投机者等对国际油价变动的影响及其作用机理.     

User Toolkits for Innovation: Consumers Support Each Other

User toolkits for innovation were recently proposed as a means to eliminate (costly) exchange of need-related information between users and manufactures in the product development process. The method transfers certain development tasks to users and thereby empowers them to create their own desired product features. This article examines the implications of different levels of opportunities for consumer involvement (OCI) in product development to learn what happens when firms pass design tasks on to consumers. It explores this issue by studying the relation between the employment of user toolkits and the need for firms to support their consumers. An analysis of 78 computer games products and the amount of support given by firms to the consumers of these products suggests that a share of the costs firms save on information acquisition by letting consumers "do it themselves" may eventually reemerge as costs in consumer support. In other words, an increase in opportunities for consumer involvement seems to increase the need for supporting consumers. A promising solution to the problem of support costs is identified, namely, the establishment of consumer–consumer support interaction. A case study of an outlier in terms of firm support to consumers—Westwood Studios—shows that consumers who use toolkits may be willing to support each other. Such interactive problem solving in a firm-established user community is advantageous to the firm, because the process reduces the amount of resources that the firm itself needs to dedicate to the support of consumers using toolkits. Generally, consumer-to-consumer interaction can facilitate problem-solving in the consumer domain, can aid the diffusion of toolkit related knowledge, and potentially can enhance the outcomes produced by the toolkit approach.     

Austrian-style gasoline price regulation: How it may backfire

In January 2011, a price regulation was established in the Austrian gasoline market which prohibits firms from raising their prices more than once per day. Similar restrictions have been discussed in New York State and Germany. Despite their intuitive appeal, this article argues that Austrian-type policies may actually harm consumers. In a two-period duopoly model with consumer search, I show that under the regulation, firms will distort their prices intertemporally in such a way that their aggregate expected profit remains unchanged. This implies that, as some consumers find it optimal to delay their purchase due to expected price savings, but find it inconvenient to do so, a friction is introduced that decreases net consumer surplus in the market.     

The impact of spectrum assignment policies on consumer welfare

The radio spectrum that governments license to mobile operators is central to the development of mobile broadband services. However, there is significant variation around how much and when spectrum is assigned as well as its costs. We assess whether policies to assign spectrum had an impact on consumer welfare in 64 countries during the 2010–2017 period. We find evidence that policies that reduce the amount of spectrum available to operators, delay the assignment of spectrum and increase the cost of spectrum all impacted two important consumer outcomes - network coverage and quality. The findings have implications for governments and regulators, particularly those betting on 4G and 5G as enablers of economic growth and sustainable development.     

POSTING MULTIPLE PRICES TO REDUCE THE EFFECTIVENESS OF CONSUMER PRICE SEARCH*

In a model of competition with imperfect consumer price information and incomplete price search, some consumers may end up comparing prices originating from the same supplier: either because one firm sets multiple prices or because a group of firms colludes. This leads to added monopoly power for these firms, and average prices in the mixed strategy equilibrium become higher. There is a shift in welfare from consumers to producers, both with exogenous and endogenous consumer search behaviour. However consumers might search more or less with multiple prices. The implications for the price‐setting equilibrium, competition policy and recent judgements are considered.     

Infant-industry tariff protection with pressure groups

This paper analyzes the increasing tariff protection in the Spanish iron and steel industry over the first third of the 20th Century. Learning effects are explicitly included to model a dynamic game of trade liberalization. The government chooses the tariff level while firms decide how much to produce each period. Firms' production decisions determine their future cost levels. Assuming that learning reduces only fixed costs, the dynamic game may be solved in closed form, so that the optimality and time consistency of the actual policy can be evaluated. Furthermore, the model is used to measure the relative importance of producers and consumers on the government's equilibrium tariff strategy. The model is calibrated for year 1913 and it is shown that the existence of important, unexploited, dynamic economies of scale may have justified high tariff levels at that time. In addition the results also show that the Spanish iron and steel producers behaved more competitively than what is commonly assumed, and that the government's protection policy was not significantly conditioned by steel producers.