Active citizen's income, unconditional income and participation under imperfect competition: a welfare analysis

Various types of basic income schemes are considered to compensatethe allocative inefficiencies induced by unemployment benefits.A dynamic general equilibrium model of a unionised economy isdeveloped in which participation to the formal labour marketis endogenous and the budget of the State has to balance. Itis shown that basic income schemes reduce the equilibrium unemploymentrate. Assuming that job-search is costly to monitor, the normativeanalysis suggests that only the active population should beeligible to the basic income. Introducing such an ‘activecitizen’s income’ can be a Pareto-improving reform.     

Trade policies,imperfect competition,and endogenous growth

Summary This paper analyses the effects of trade policies in a general equilibrium two-conutry model with imperfect competition. This model generalizes the models of monopolistic and Cournot competition. Trade is shown to be welfare-increasing in the monopolistic completition model. The same holds true in the case of endogenous growth. In the model of Coumot competition, the welfare effects of trade policies depend upon the type of entry and exit. Indeed, it is possible for two countries to increase their welfare by pursuing a coordinated policy of protection. In an endogenous growth setting, the validity of the latter finding depends upon the consumer rate of time preference.At the time of writing, the author was affiliated with the Ministry of Economic Affairs. An earlier version of this paper was presetned at the ECOZOEK-day, June 11, 1993, Tilburg and was awarded theKVS-prize 1993 of the Royal Netherlands Economic Association. The author would like to thank an anonymous referre, P.A.G. van Bergeijk, R.A.de Mooij, A. Nieuwenhuis, F. van der Ploeg, J. van Sinderen, S. Smulders, and P.M. Waasdorp for useful comments. The views expressed in this paper are strictly presonal.     

Trade policies and imperfect competition: A note

Vrije Universiteit, Amsterdam. Comments by Simon Kuipers on an erarier version are gratefully acknowledged.     

On the stabilizing virtues of imperfect competition

We analyze the stabilizing role of imperfect competition on fluctuations as a result of indeterminacy and endogenous cycles. In this paper, imperfect competition is a source of monopoly profits, because of producer market power. Considering an overlapping generations model with capital accumulation and elastic labor supply, we show that under imperfect competition, the emergence of endogenous fluctuations requires a weaker substitution between production factors than under perfect competition. In this sense, imperfect competition stabilizes fluctuations. However, we find an opposite conclusion concerning the elasticity of labor supply. Indeed, endogenous fluctuations are compatible with a less elastic labor supply under imperfect competition.     

Market integration and imperfect competition in labor and product markets

We analyze the consequences of product market integration in a simple two-country, two-sector, general-equilibrium model with imperfect competition due to economies of scale. In contrast to the existing literature we take explicit account of the labor-market structures in the integrating economies. It turns out that the specific labor-market structures are very important for how integration affects total production and product market structure in a particular economy. However, integration always gives rise to a welfare gain in both economies.I have benefitted from comments by an anonymous referee, a coeditor of this journal, and by participants in a workshop arranged by CIE in April 1992, at the University of Aarhus, and by participants at the EEA conference in Dublin 1992.     

The incentive for export subsidies under imperfect competition

By taking into account factor market interactions, the theory of strategic trade policies can consistently explain the fact that less efficient countries offer greater export subsidies to the most technologically advanced industries because in these countries there may be greater differences in efficiency of production technology between industries than in more efficient countries.     

Returns to scale,imperfect competition and aggregate demand and trade policy effects in a two-country model

This paper constructs a simple general equilibrium two-country model with flexible exchange rates, specialization in production, and oligopolistic firms. The model is simulated in order to investigate how returns to scale and imperfect competition influence the process through which the aggregate demand and trade policy effects are transmitted internationally. The possibility that aggregate demand and trade policies enacted by one country can have beggar my neighbor effects on the other country cannot be excluded.     

Trade policy under imperfect competition: The economics of Russian roulette

Summary Neo-classical economic theory shows that managed trade or protectionism is (almost) always welfare decreasing. However, measurements of the welfare costs of protectionism based on neo-classical models seem to suggest that these costs are quite small. We discuss general new insights and developments in the theory, policy and empiricism of international trade. The observation that intra-industry trade and the services sector are important has led to a shift in theory away from constant returns to scale and perfect competition towards economies of scale and scope, externalities, market imperfections, and imperfect competition. Although this, in principle, opens the door to beneficial government intervention in the economic process, we emphasize that the true costs of protection can potentially be much higher than is generally acknowledged as a result of the above mentioned shift.We would like to thank, without implicating, Martin Fase, Harry Garretsen, Catrinus Jepma, Simon Kuipers, Ger Lanjouw, Tenn Schmidt, Albert de Vaal, and Jean-Marie Viaene for stimulating conversations and useful suggestions. We thank Thijs Knaap for excellent research assistance.     

分割生产、外商直接投资与中国进口

关于分割生产的研究表明,直接投资和国际贸易的关系既非单调的,也非确定不变的。如果考察的国家或行业之间引发直接投资的原因不一样,或者处于不同的分割生产发展阶段时,得出的直接投资和国际贸易的关系是不一样的。现实中的直接投资和国际贸易关系实际上是一个实证问题。基于1987～2006年中国29个省市数据变系数模型的研究表明:对于绝大多数省份来说,FDI引起进口的增加;从不同省份看,FDI对进口的影响程度是不同的;近年来FDI对中国进口的促进作用在减弱。     

Imitation, patent protection, and welfare

Newly developed technologies run the risk of being imitatedwhen patents are long and imitation cost is low. This papershows that the innovator has the incentive to postpone technologyadoption when imitation is a credible threat but imitation costis not below a certain threshold. The possibility of licensingeliminates or at least reduces the incentive for delayed technologyadoption. Further, this paper explains the advantages of a forwardlicensing contract versus a simple licensing contract in termsof profits and social welfare.     

Quantitative restrictions,unempolyment and welfare

This paper explores the effects of import quotas and voluntary export restraints (VER) on employment and welfare of an economy plagued by generalized unemployment due to wage rigidity. The welfare effects of quotas and VER in the presence of unemployment are compared with those derived in the traditional full employment model. We show that a tightening of quotas or VER may improve welfare.     

Market structure, pigouvian taxation, and welfare

Using a short-run partial equilibrium model of social welfare, this paper examines the social welfare implications of changing Pigouvian taxes under three markets: perfect competition, monopoly, and Cournot oligopoly. The result for perfect competition supports the earlier finding that Pigouvian taxation increases social welfare [Buchanan, 1969]. However, in contrast to the previous result that Pigouvian taxes lower welfare under monopoly, the authors show that if the noncompetitive distortion is small, these taxes might still be useful in correcting monopoly-generated externalities and in improving social welfare. Cournot firms react to the tax depending upon their individual perceptions of the gain in post-tax marginal revenue. Policy implications of the study's results are discussed.     

Foreign capital, unemployment and national welfare

We consider a situation where foreign capital is allowed to flow only into the export-processing zone of an economy characterized by unemployment and pursuing protectionary policy. We derive conditions under which growth induced by an increase in the flow of foreign capital will be immiserizing. The results are derived when foreign capital does not directly flow into the protected sector but alters the composition of outputs in the other traded sectors through inter-sectoral reallocation of other resources.     

Interest rates, risk, and imperfect markets: puzzles and policies

Traditional theory emphasizes the key role that monetary policycan play through the manipulation of interest rates. But thereare several puzzles that cannot be reconciled with standardmodels. These include: the apparent constancy in interest ratesover extended periods, and changes at other times which appearunrelated to changes in technology and demography; the cyclicalpattern of movements in real interest rates; the impact of nominalnot real interest-rate changes on real variables; and the cyclicalpattern of movements in interest-rate spreads. This paper reachesbeyond the standard competitive equilibrium, perfect information,model of credit markets towards imperfect information models,particularly those that focus on the determinants of bank behaviour.Of the standard models, the money demand model is most deficientin understanding these puzzles. The loanable funds theory anda generalized version of real productivity theory can be reconciledwith imperfect information, and markets and the consequent creditand equity rationing regimes help to explain the puzzles. Specifically,banks may be insensitive to changes in monetary stance owingto risk aversion. There are strong policy implications; it isargued, for instance, that in East Asia raising interest ratesexacerbated economic decline and, rather than contributing toexchange-rate stability, may have induced capital flight asdefault risk increased, lowering risk-adjusted expected returns.     

国际生产分割、技术进步与产业结构升级

本文在Dixit-Stiglitz垄断竞争框架内,把国际生产分割进行内生化处理,揭示了在国际生产分割条件下,东道国技术进步和产业结构优化存在相互促进的互动关系。在理论分析的基础上,基于中国2003～2008年的工业行业数据,本文使用了面板数据联立模型实证考察了中国技术进步和产业结构调整的互动影响。回归结果表明:生产率水平提高1%,则技能升级提高0.277%;技能升级提高1%,会在当期使生产率水平提高0.111%,滞后一期使生产率水平提高0.310%。