Tariffs and Wages in Trade Theory

The theory of production and trade is motivated in large part by the effects of tariffs on wages. General equilibrium models that examine these effects include constant costs, factor proportions, specific factors, imperfect competition and noncompetitive factor market. The present paper reviews the effects of tariffs on wages in small open economies across this broad range of trade theory. From this wide perspective, tariffs support wages only under narrow sets of assumptions. There should be no presumption that tariffs support wages.     

Reforming Tariffs and Subsidies in International Trade

This paper analyzes unilateral and multilateral reform of ad valorem tariffs and subsidies. The paper shows that under substitutability, extensive subsidization of exports is required for an increase in the lowest tariff rate to raise economic welfare. The paper derives also conditions for when a radial reduction of ad valorem tariffs and subsidies may fail to raise economic welfare.     

Merger Policies and Trade Liberalisation

This paper is about the interactions between trade policy and a narrow but important aspect of competition policy, namely merger policy. We focus on links between merger policies and trade liberalisation. We put special emphasis on the topical issue of the role that international agreements such as the GATT play when merger policies are nationally chosen. Of particular concern is the possibility that liberalisation of international trade will induce countries to use competition policies to promote national interests at the expense of others.     

Merger Profitability and Trade Policy

We study the profitability incentives for merger and the endogenous industry structure in a strategic trade policy environment. Merger changes the strategic trade policy equlilibrium. We show that merger can be profitable and welfare enhancing, even though it would not be profitable in a laissez‐faire economy. A key element is a change in the governments’ incentives to give subsidies to their local firms. National merger induces more strategic trade policy, whereas international merger does not.     

Trade Reform Diagnostics with Many Households, Quotas, and Tariffs

Revenue-neutral trade reform is desirable if revenues are made up from less costly distortions. With a particular computable general-equilibrium model, reforms can be evaluated, but the robustness of conclusions is suspect; they depend on a particular specification and parameterization of the model economy. This paper provides a diagnostic toolkit which permits sensitivity analysis across model specifications and parameterizations, notably allowing for heterogeneous households. Novel elements include emphasis on the concept of compensated marginal cost of funds (MCF) necessary to sensitivity analysis, development of the MCF of quotas, and analysis of the relationship between aggregate MCF and social welfare.     

Transfer Prices, Tariffs, and Content Restrictions

The efficacy of a local content requirement as an employment enhancing policy in the host country is weakened in the presence of transfer price manipulation by a vertically and horizontally integrated multinational firm. For given host and foreign country tax rates, there is a threshold tariff above which the aggregate real effects of transfer price manipulation are unambiguous and below which these effects are ambiguous. Stricter content restrictions reduce benefits to host country factors, and higher tariffs increase benefits to host country factors in the presence of resale price constraints and endogenous-limit transfer prices.     

Bilateral Agreements in a MultiFirm Industry: Technology Transfer and Horizontal Merger

The paper studies the profitability of technology transfer and horizontal merger between two asymmetric firms in a multifirm Cournot oligopoly. If there is only one technologically advanced firm and one or many technologically backward firm(s), a profitable technology deal between two asymmetric firms exists if and only if the collaborating firms are "close" in terms of their initial technology levels. With more than one advanced firm such a technology deal is "always" profitable. Contrary to that, a profitable bilateral horizontal merger occurs if and only if the gap of technologies between the two partners is larger than a critical level. The paper also studies the relative profitability of these two bilateral arrangements.     

IPR,Trade, FDI,and Technology Transfer

In this survey, we discuss how intellectual property rights （IPR） protection in the South affects trade flows, foreign direct investment （FDI） flows, and technology transfers from the North to the South. We also discuss optimal IPR policies and their effect on innovation. Our discussion covers both theoretical studies and empirical evidence. This survey is both comprehensive and critical. It aims to give readers the current state of IPR and globalization literature. Some issues have been studied more thoroughly, whereas for others the surface has only been scratched upon. This survey gives readers a clearer picture of the literature and may help them find future research topics.     

Tariffs vs Quotas in a Model of Trade with Capital Accumulation*

This paper examines the equivalence among price‐modifying and quantity‐fixing international trade policies in a differential game. We employ two well‐known capital accumulation dynamics for firms, due to Nerlove and Arrow and to Ramsey, respectively. We show that, in both cases, open‐loop and closed‐loop Nash equilibria coincide. Under the former accumulation the tariff‐quota equivalence holds, while, in general, it does not under the latter. Moreover, in the Ramsey model, the country setting the trade policy (weakly) prefers a quantity‐equivalent import quota to the adoption of the tariff. These results are not a consequence of the equilibrium concept we adopt (with and without market power), but directly follow from the interplay between market power and the properties of accumulation dynamics.     

Macroeconomic Interdependence with Trade and Multinational Activities

This paper examines how differences in the integration strategies followed by firms active in foreign markets affect the way productivity and policy shocks spread their effects worldwide. The analysis incorporates costly trade and local sales by multinational firms in a general-equilibrium open economy macroeconomic model. The mode of foreign market access is found to play a major role in the international business cycle, affecting the dimension of consumption and output spillovers worldwide. We show that despite financial markets being effectively complete, consumption risks may not be fully insured in the world economy as long as multinational firms discriminate prices across markets. Furthermore, cross-country differences in firms' integration strategies can account for extensive asymmetries in the way country-specific and global shocks are transmitted in the world economy. We argue that this may have relevant consequences for the welfare implications of monetary and trade policies.     

隐形碳关税对国际贸易的影响与启示

文章基于隐形碳关税的形式,就隐形碳关税对国际贸易的影响进行了系统的分析,结果发现,以碳标签、碳足迹、国际生产标准等为代表的隐形碳关税措施对国际贸易的影响比碳关税措施的影响要更加突出,不仅提高了出口方的出口成本,更是使得出口方产品及服务市场注入受限,甚至还影响到发展中经济体的低碳贸易话语权的丧失.研究结论认为:中国应该以低碳外贸体系构建为主线来规避隐形碳关税壁垒,推进低碳外贸体系构建以促进我国低碳经济发展及外贸结构优化.据此,文章建议通过强化立法保障,强化国际合作完善隐形碳关税治理机制,利用好GATT例外条款,大力发展低碳技术及推进区域价值链体系建设来构筑中国低碳外贸体系,以期为中国低碳外贸体系的建立提供理论依据.     

The Nonequivalence of Tariffs and Quotas in a Dynamic Trade Model

The paper provides a novel (and old) argument for the nonequivalence of tariffs and quotas, based on the famous paper by Hotelling published in 1931. Unlike tariffs, quantitative restrictions are inherently dynamic. As long as the foreign exporter earns positive marginal profits, he raises their present value by frontloading sales. As a result, unlike a tariff, equilibrium with a quota exhibits quantity and price dispersion over time. The dispersion may be significant even with small discount rates.     

碳关税对出口贸易影响研究综述

碳关税是近年来国际贸易领域新的热点问题,且该问题的提出使气候问题日趋贸易化、政治化。由于各国基于本国的利益,对碳关税问题的立场有所不同,所以国内外学者对碳关税的研究出发点亦存在着差异。力图通过文献回顾,从碳关税的内涵出发,探讨碳关税在WTO框架下的合法性问题,着重对国内外有关碳关税对出口贸易的影响以及应对策略等研究成果进行了梳理和分析,并在此基础上进一步提出该领域未来的研究方向。     

Advancing the Multilateral Regional Cooperation in Economy and Trade with the Scheme Reform of Zero Tariffs

China＇s tariff arrangement in the transition period after ＂entry to WTO＂ influences the process of the multilateral trade system in the world. Establishing the free trade area and customs union according to WTO/GATS 1994 article 24, or according to authorizing the clause （Enabling Clause ） to sign the regional trade agreement between developing countries or signed the protocol of economic integration taking promoting and serving the liberalization of trade as purpose according to WTO/GATS article 5, include the regional trade agreement in the multilateral trade system frame to standardize, supervise and coordinate to China, reduce trade protectionism and improve the multilateral trade system＇s influence in the world greatly. Drawing lessons from CEPA and China the system of the manoeuvre ahead of time of overall ＂entry to WTO＂ of ASEAN Free Trade Area and arrange, accelerate multilateral regional cooperation in economy and trade, zero tariff scheme reform favors route choice.     

Technology Transfer,Quality Standards,and North–South Trade

This paper examines the economic consequences of technology transfer through licensing in a North–South model of vertical product differentiation, based on a product‐line pricing framework. With its limited technological expertise, the southern firm cannot export to the northern market without purchasing the northern firm's “clean” and low‐cost technology. With North–South cost‐asymmetry, we conclude that the transfer of technology through licensing promotes trade, product variety and improves global welfare. However, without government intervention, the private levels of product quality chosen by firms tend to be lower than the socially optimal levels. This finding helps to explain why developed countries often set quality standards for imported foreign products.     

On the International Linkages between Trade and Merger Policies*

In a three‐country model, this paper investigates linkages between merger incentives of exporting firms and the trade policy of an importing country. When exporting firms come from only one country, the tariff response of the importing country reverses the welfare effects of a merger in the exporting country. If there exist two exporting countries, a merger creates two types of conflicting international externalities. First, a merger in one exporting country increases profits of all firms. Secondly, non‐merged firms lose if the importing country is free to raise its tariff in response to a merger of foreign exporters.     

Optimal Tariffs with Endogenous Production Location

This paper attempts to examine how the inclusion of economic space affects trade policies and to make a comparison between optimal tariffs with endogenous location and those with exogenous location. In particular, it is shown that the output effect of a tariff change with endogenous location is greater than that with exogenous location if the production function is non-CRS. Moreover, when the production function is CRS (resp. not CRS), the optimal tariff under endogenous location is the same as (lower than) the one under exogenous location.     

Capital Imports and Tariffs

This paper develops a three‐sector, three‐factor specific factor model with a tariff and presents conditions under which capital imports and tariffs can be welfare enhancing in a developing country. The impact on welfare depends on the tariff revenue effect and the repatriation effect. A capital import is welfare enhancing if it reduces the domestic output of imports. A tariff is welfare enhancing only if it reduces the return to foreign capital.     

Training and Technology Transfer

This paper analyses technology transfer from a multinational corporation (MNC) to a developing economy via training of local workers by the MNC. The paper analyses the determinants of the level of training by the MNC assuming a local entrant can subsequently hire MNC–trained workers and compete with the MNC. It is shown that a small training subsidy paid by the host government may cause the MNC to switch from entry–deterring behaviour to entry–accommodating behaviour. Such a subsidy will cause an increase in the number of skilled workers but may increase or decrease the domestic welfare of the developing country.     

Technology Transfer and Learning

Despite the fact that international technology transfer has been widely studied its management still encounters many difficulties. To fully understand the issues that are relevant to the process of transferring production technology, it is necessary to determine the important factors that influence this process. Learning curves are often used as a means of determining the time required to become familiar with a transferred technology. The cases discussed in this paper have all employed learning curves, which were established at the outset of the transfer process and which turned out to be incorrect. As a consequence the envisaged efficiencies were not obtained. This phenomenon is partly due to the fact that when technology is transferred to a relatively inexperienced 'destination company', the curve is established based on the circumstances of the 'source company'. The case study findings lead to the conclusion that to establish a realistic curve a more comprehensive method is required than simply basing anticipated performance on that achieved at the source company.