The North American free trade agreement: International competitiveness for vegetables

Summary and conclusion This research contributes to the knowledge base of potential impacts of NAFTA using quadratic programming, which treats consumers and producers in different regions uniquely and specifies the direction and volume of trade between regions, net social payoff, as well as equilibrium prices to producers and consumers. Our results show that net social payoff and the volume traded between producing and consuming regions increases significantly under NAFTA. Mexican producers gain the most since their market share equalled 80 percent and 64 percent for cucumbers and cantaloupes, respectively, in the post-NAFTA scenario. California producers lose the most, e.g., their market share for cucumbers declined from 76 percent in the pre-NAFTA scenario to nearly zero in the post-NAFTA scenario. On the consumption side, the amount of total cantaloupes consumed more than doubled, while the amount of total cucumbers consumed increased slightly (2 percent). Mexico's producer prices for both crops was significantly lower compared to U.S. producer prices. Since net social payoff increased under NAFTA, the overall gains exceeded the overall losses. The authors with to thank Drs. Harry Hall, Michael Reed, and Angelos Pagoulatos (all from the University of Kentucky) for their helpful suggestions.     

Effects of the Mexican Apple Tariff on the World Apple Market

In response to the USA blocking Mexican trucks from traveling to the inland part of the USA, Mexico imposed tariffs on US fresh apple exports. This study analyzes the impacts of the Mexican tariff on USA, Mexican and world apple markets by using theoretical analysis and developing a spatial equilibrium trade model. The results show that this tariff increases apple prices in Mexico, to the benefit of Mexican producers but harming Mexican consumers. Even though Mexico collects revenues from its tariff, the overall welfare impact is negative because consumers' loss outweighs producers' gain and tariff revenues. Since the USA exports less to Mexico, its prices and production decline, but consumption increases. To mitigate the export market loss to Mexico, the USA redirects its exports to other importing countries, displacing other apple exporting countries' trade with these importing countries.     

我国玉米产业技术进步的福利效应分析

在分别构建供给和需求模型对我国玉米生产消费状况进行分析的前提下,运用福利效应模型测算了技术进步对玉米生产者和消费者的福利效应,基本结论为:玉米具有较低的供给弹性和需求弹性,玉米技术进步的福利效应表现为消费者福利增加和生产者福利减少,但消费者福利的增加值大于生产者福利的减少值,使得整个社会的经济福利处于上升趋势。     

Graded eco-labels: A demand-oriented approach to reduce pollution

Supplied oriented environmental policies are generally used in order to limit production related pollution. This fact is based on the hypothesis that consumers are not willing to sacrifice personal utility for a wider social gain. We suggest that widespread environmental concerns of consumers can be exploited to push producers along cleaner technological patterns. Our core assumption is that consumers would be ready to purchase cleaner products if the products' characteristics are not ‘too dissimilar’ to those of more polluting alternatives. However, due to a lack of information about non-observable product characteristics, this assumption on its own is not sufficient for ‘environmental friendly’ producers to become competitive. We show - by means of a simulation model - that only if consumers are provided with appropriate information on the greenness of products through adequate eco-labels (graded eco-labels), then producers will be pressed to implement innovations aimed at reducing the environmental impact of their products. Under two test settings - one without any certification and another with binary eco-labels - the model shows markets characterised by highly polluting technological patterns. Only in the presence of graded eco-labels, competition drives the market toward cleaner technological patterns.     

Money: Capital Good,Consumers’ Good,or (Media of) Exchange Good?

Is money a producers’ good or a capital good, or is it sui generus, as Mises, Rothbard, and other Austrians have maintained? We argue that all action is either consumption or production, and that exchange is but a form of production. Consequently, all goods are either consumers’ goods or producers’ goods; there is no third possibility. And that among these two money is a producers’ good, not a consumer good.     

Regulating internal markets for hospital care

Internal markets have been created in an attempt to shift power from producers to consumers in a context where consumers have very weak incentives to seek out low-cost producers and have little knowledge about the quality of health care. The idea is that by establishing public agencies to act as the sole purchasers on behalf of consumers in their area of jurisdiction, the asymmetry of information can be moderated and a more competitive environment created in which costs will be minimized and quality enhanced. Whether these aspirations can be fulfilled will depend on how the internal market is organized. In this article the cost-minimizing properties of alternative market structures where hospitals do not share the same objectives are examined. The scheme is designed from the standpoint of a benevolent regulator that provides services using two hospitals with fixed locations. The paper shows that price discrimination is a superior instrument. Finally some market forms are always dominated and should be avoided.

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从生态学视角审视我国目前的过度消费现象

目前,我国生产和生活领域存在严重的过度消费现象.缺乏忧患意识的消费观念、收入分配的马太效应、以高耗能重工业为主的产业结构、粗放型生产方式以及生态消费体系的不完善等,是导致这一现象的主要原因.过度消费现象日益严重既阻碍我国构建和谐社会,又使我国面临资源枯竭和生态危机.治理过度消费,应通过实行消费税等政策对消费者和生产者行为加以引导规范,并通过建立生态消费体系,构建社会主义和谐社会.     

Are labels effective against child labor?

In this paper, we investigate the impact of introducing a label certifying the absence of child labor in the export production of the South. When most eligible producers in the South can obtain the label, its impact is considerably reduced by a displacement effect whereby adult workers replace children in the export sector while children replace adults in the domestic sector. The label is then unable to create a price differential in the South between goods produced under the label and those produced without it.When only a small fraction of eligible producers have access to the label, the South exports both labeled and unlabeled goods to the North. In this case, labeled producers generally gain while those without a label generally loose from the introduction of the label. Ex ante welfare may fall in the South if the probability of getting a label when one qualifies is small. The impact on child labor is in general ambiguous.     

Loss aversion and social security: a general equilibrium approach

Introducing an intertemporal model of loss aversion, I study the role of social security in determining intergenerational redistribution when consumers have reference-dependent preferences with loss aversion. Using a unified social security model in which different social security plans are specified via different degrees of fundedness, I examine the effect of the transition from a less funded system to a more funded one on savings, consumption, and capital accumulation for an OLG production economy. A general equilibrium analysis shows that the direction of intertemporal equilibrium is dependent on how the total savings responds to the interest rate change, but the effect of the payroll tax on capital accumulation is ambiguous. By deriving closed-form solutions, I find that an increase in fundedness intensity unambiguously increases capital accumulation in steady states, while the tax effects on consumption and savings are not conclusive. Moreover, simulation exercises show that when consumers are prone to over-consume because they care more about the contemporaneous gain utility, the fully funded system may help the individuals smooth out their lifecycle consumption.     

Green certification,heterogeneous producers,and green consumers: a welfare analysis of environmental regulations

We develop a vertical differentiation model to analyze welfare implications of environmental policies in a competitive market with production and consumption heterogeneity. Consumers with heterogeneous preferences choose between non-green and certified green products, while producers with heterogeneous production costs decide whether to engage in green production. In order for green products to be recognized by consumers, producers must join a green club. Key findings are summarized as follows. (i) The number of green producers, environmental standard, and overall welfare under the market solution are all socially sub-optimal. (ii) The introduction of a subsidy policy for greener production and standards is shown to increase social welfare, but is not Pareto optimal. (iii) A dual policy, which combines abatement subsidizes for a greener production standard and a tax charge for green certification, is shown to be the Pareto-optimal outcome.     

Producer and Consumer Interests, the State-Owned Pipeline, and Public Authority Pricing of Natural Gas*

This paper considers producer and consumer interests when state ownership of a pipeline provides a public authority with monopoly and monopsony power. In contrast with the producer/consumer conflict in the regulatory setting where self-interested authorities choose the price at which producers and consumers directly transact with one another, in the pipeline case producers and consumers have a commonality of interest which is sustained even if the authorities take the view that it is politically inexpedient to take advantage of monopoly power with respect to consumers.     

基于农产品质量安全的技术扩散博弈分析

在有限理性的假设下,本文采用演化博弈论方法,分析了生产者之间、生产者和消费者之间以及生产者和政府监管部门之间相互作用时的策略选择行为,揭示出经济利益是影响质量安全技术扩散的主要内在因素。因此,若要遏制不安全技术行为的发生,一是要减少生产者的违规收益,严厉处罚并提高其生产成本;二是引导消费者增加对安全农产品的需求;三是加强对监管者的再规制,提高其监测能力、监管频率等。     

Steel safeguards and the welfare of U.S. steel firms and downstream consumers of steel: a shareholder wealth perspective

Abstract.  This paper analyses the steel safeguards applied during 2001–3. Results reveal that for shareholders of U.S. steel companies safeguards generated positive 'abnormal' returns of approximately 6%. The cancellation of the safeguards resulted in wealth gains of about 5%. Steel shareholders experienced negative abnormal returns of −5% in response to the WTO ruling that the U.S. had violated WTO law. Our results are consistent with the neoclassical view that producers gain at the expense of consumers. Also, findings indicate that downstream-consuming firms that diversify production in NAFTA countries avert some trade policy risk associated with higher steel costs caused by safeguard protection.     

Market institutions and economic evolution

Our cognitive limitations cause us to rely on institutions to guide reasonable behaviour; market institutions reduce the costs of search, negotiation, and monitoring entailed in making single transactions. The making of markets requires an investment of immaterial capital, the major share of which typically is provided by those who expect to be very active on one side of the market. This `external organisation' provides producers with information for the development of new products; by simplifying transactions it also allows consumers greater scope for developing consumption capabilities. Thus the evolution of institutions guides the evolution of goods and services.     

Revisiting the welfare effects of eliminating business cycles

We investigate the welfare effects of eliminating business cycles in a model with substantial consumer heterogeneity. The heterogeneity arises from uninsurable and idiosyncratic uncertainty in preferences and employment status. We calibrate the model to match the distribution of wealth in U.S. data and features of transitions between employment and unemployment. In comparison with much of the literature, we find rather large effects. For our benchmark model, we find welfare effects that, on average across all consumers, are of a bit more than one order of magnitude larger than those computed by Lucas [Lucas Jr., R.E., 1987. Models of Business Cycles. Basil Blackwell, New York]. When we distinguish long- from short-term unemployment, long-term unemployment being distinguished by poor (and highly procyclical) employment prospects and low unemployment compensation, the average gain from eliminating cycles is as much as 1% in consumption equivalents. In addition, in both models, there are large differences across groups: very poor consumers gain a lot when cycles are removed (the long-term unemployed as much as around 30%), as do very rich consumers, whereas the majority of consumers—the “middle class”—sees much smaller gains from removing cycles. Inequality also rises substantially upon removing cycles.     

Guaranteed Manufactured without Child Labor: The Economics of Consumer Boycotts, Social Labeling and Trade Sanctions

Does labeling products “Child‐Labor Free” provide a market‐based solution to the pervasive employment of child labor? This paper explores the promise of social labeling in the context of its four oft‐noted objectives: child labor employment, consumer information, welfare, and trade linkages, when competition between the North and South is based both on comparative cost advantage, and the use of child labor as a hidden product attribute. We show that (i) social labeling benefits consumers and Southern producers, whereas children and Northern producers are worse off; (ii) trade sanctions on unlabeled products deteriorates Southern terms of trade, but leaves the incidence of child labor strictly unaffected; and (iii) a threat to sanction imports of unlabeled Southern products discourages the South from maintaining a credible social labeling program. We also explore the question of whether social labeling should be viewed as a transitory or a permanent institution in developing economies.     

Setting Price Controls While Facing Variable Or Uncertain Market Conditions

Price controls under variable or uncertain market conditions do not lead to market equilibrium. Under different assumptions for the rationing mechanism during shortages and surpluses, I find, assuming small market shocks, that the optimal regulated price can be related in a simple way to the relative slopes of the marginal benefit and marginal cost functions. In addition, if the consumption price may differ from the production price, then consumers should pay less than or equal to what producers receive, implying possibly a unit subsidy to market transactions.     

Private copying,reproduction costs,and the supply of intellectual property

Recent technological advances that have substantially reduced the cost of private copying of intellectual property, and led to widespread copying, have produced claims of severe harm to producers. This paper develops a model to analyze the effect of private copying on the profits of producers and the welfare of consumers. When originals and copies are perfect substitutes and all originals are copied the same number of times, a necessary and sufficient condition for both profits and consumer welfare to decrease is that copying is less efficient than producing originals. However, when some originals are copied and others are not, producer profits may decline even when copying is efficient, and some consumers may benefit from inefficient copying. The analysis suggests that published estimates of the harm to producers resulting from private copying may be seriously in error.     

Bundling in the Australian Telecommunications Industry

This article considers some of the implications for social welfare of bundling in the Australian telecommunications industry. The practice of bundling—offering two or more products for sale as a single package—is a strategy used in many industries. Although common, there are circumstances when the practice can be used anti-competitively. Yet bundling does not always harm consumers; at times, the practice benefits both consumers and producers, and it can even advantage consumers to the detriment of producers. The general literature on bundling suggests that its effect on social welfare depends on several factors such as market structure, the elasticity of demand for the products, the marginal cost of production, economies of distribution and the use of complex menus. We consider these factors when assessing the likely welfare effects of bundling in the Australian telecommunications industry, concluding that the potential effects of bundling on competition and the information costs imposed on consumers by complex menus of services seem the most significant considerations for social welfare. It is desirable that regulatory authorities monitor developments closely, although heavy-handed regulation of bundling seems undesirable.     

Quality certification standards in competitive markets: When consumers and producers (dis)agree

A quality certification standard in a competitive setting can improve welfare but may affect consumers and producers differently. In a competitive model with quality preferences of the vertical product differentiation type, we find that producers prefer a higher (lower) quality standard than consumers if individual demand functions are log-convex (log-concave).