Help not needed? Optimal host country regulation of expatriate NGO workers

Motivated by interventions in poor countries to increase the use of local labor in foreign nongovernmental organizations (NGOs), we address the behavior of these organizations under host government regulation. We extend existing NGO models by distinguishing between local workers and expatriates. The model covers both NGO monopoly and competition in the market for donations. Assuming that NGOs maximize output, we show that regulations in the form of a quota on the number of expatriates or a work permit fee for foreigners reduces NGO output, but increases employment of locals. The optimal quota is more likely to bind in the market structure generating the highest total fundraising surplus. An optimal work permit fee is equivalent to an optimal quota in both the monopoly and duopoly cases. For both instruments, the optimal tightness of regulation is decreasing in the weight the government attaches to the public good relative to domestic incomes and in the importance of NGO output to the supply of the public good. Aggregate NGO output and the level of the public good produced could be higher with a monopoly NGO.     

Trade Policies for Exporting Industries under Free Entry

This paper computes optimal export taxes and domestic production subsidies for exporting industries under free entry. We show that domestic welfare is not at maximum, as is typically believed, when the export price is a monopoly price, and the domestic price is a competitive price, because a market structure effect has to be taken into account. Furthermore, we show that the optimal tax/subsidy formulas for an oligopoly coincide with those under perfect competition, if foreign and domestic demand functions are both linear. We also discuss optimal trade policies when only one instrument is available, and we run numerical simulations to determine and compare optimal trade taxes under endogenous and exogenous market structures.     

市场结构及市场效率的实验经济学综述

实验经济学对于市场效率和市场结构的研究最早在1948年由Chamberline开创。经济学家经过大量实验发现,不但市场前提假设关系到市场均衡结果及效率,交易制度也会对均衡产生重大影响。并且,不符合完全竞争市场假设的市场结构也有可能实现资源有效配置。本文对实验经济学关于市场结构及市场效率的相关研究进行了回顾与综述,并重点阐述其对完全竞争市场的研究,以揭示交易制度及市场前提对市场效率的综合影响。本文得到的结论显示：即使没有达到完全竞争市场的严格假设,也可能达到完全竞争市场的均衡状态,因而达到最优的配置效率。并且,对于市场结构——完全竞争、垄断和寡头垄断市场的实验研究也表明,并不是如传统古典经济学模型所言：只有完全竞争的市场结构才能够达到资源的有效配置,垄断市场效率也并不是完全与模型所言一致。而且不同于古典经济学,实验经济学将交易制度看作外生变量,认为其对最终市场效率也会产生很大影响。     

Strategic R&D and the innovation of products: understanding the role of time preferences and product differentiation

We evaluate the effects of innovation on competition using an optimal control approach that incorporates firms' time preferences. Using a model where firm(s) innovates by investing in research and development to create a more appealing product for heterogeneous consumers, we examine conditions that maximize social welfare. When firm(s) choose discount rate regardless of market structure, a monopoly will develop more innovative products. However, we show that duopolies may increase innovation if competition alters firms' outlook. Finally, we identify firm incentives to behave myopically, which in the context of collusion may impede industry-wide innovation.     

PRODUCT QUALITY,REPUTATION, AND MARKET STRUCTURE*

In a repeated game in which firms simultaneously choose price and product quality, but quality is observed only after consumption takes place, equilibria exhibiting high quality may exist in oligopoly markets even when the low‐quality one is a unique equilibrium outcome in monopoly and competitive markets. Oligopolists can sustain high quality through the threat of both a loss of reputation and a breakdown in tacit collusion. While we abstract from other reasons that market structure might affect product quality, we show that the inverted‐U shaped relationship between feasible quality and market structure is robust to several generalizations of the model.     

Market Power with Interdependent Demand: Sale of Emission Permits and Natural Gas from Russia

With implementation of the Kyoto Protocol, Russia will most likely be able to exert market power in the emission permit market. But, as Russia is also a big exporter of fossil fuels, the incentives to boost the permit price may be weak. However, a significant share of Russia’s fossil fuel exports is natural gas. If a high permit price boosts the demand for natural gas through substitution from more polluting fuels and thus increase gas profits, this may increase the incentives to exert monopoly power in the permit market. Moreover, a large fossil fuel exporter may use its market position to influence the effective demand for permits. Hence, the relationship between permit income and fossil fuels exports runs in both directions. In this article, we explore the interdependence between the revenues from permit and fossil fuel exports both theoretically and numerically. A computable general equilibrium model suggests the fact that Russia as a big gas exporter has small effect on the incentives to exert monopoly power in the permit market. Moreover, Russia’s monopoly power in the permit market has a small, but non-negligible impact on the optimal level of Russian gas exports.     

Using Market Structure to Regulate a Vertically Integrated Monopolist

A natural monopolist whose cost is private information produces a good which is combined with another good that can be produced by the monopolist or by other firms. The agency that regulates the monopolist can impose any of several different market structures in the industry: integrated monopoly, vertical separation with free entry downstream, or liberalization downstream (both integrated and independent production). When several firms produce downstream, a Cournot quantity-setting game with free entry determines the market price. We derive the optimal contracts to offer the monopolist under all three market structures and examine the influence of downstream cost differences on access prices.We then study the optimal regulatory policy where the regulator can condition the downstream market structure on the monopolist's cost report to the regulator. The optimal regulatory policy awards a monopoly to a low-cost upstream firm, but requires free entry downstream if the monopolist reports high upstream costs. Thus, the choice of market structure is an additional tool to limit rent extraction by the monopolist. Simulation analysis reveals the possibility of significant welfare gains from this additional regulatory tool.     

A note on the effects of market power distribution in Cordella and Gabszewicz's Ricardian model

We argue that it is the distribution of market power among agents, rather than the use of market power itself, that may force Ricardian economies into autarky. By applying Baldwin (1948) monopoly equilibrium concepts to the general equilibrium with imperfect competition model analyzed by Cordella and Gabszewicz (1997), we show that the monopoly equilibrium outcome Pareto dominates the oligopoly one. As a consequence, economic efficiency is higher when market power is concentrated in one agent than when it is evenly distributed among few agents.     

Environmental Tax in a Green Market

We examine the impact of an emission tax in a green market characterized by consumers’ environmental awareness and competition between firms for both environmental quality and product prices. The unique aspect of this model comes from the assumption that the cost for an increase in quality is fixed. We show that the emission tax improves welfare, thanks to a decline in pollution and despite an accentuation of product differentiation. The higher the marginal environmental damage is, the higher the optimal tax will be. The optimal tax, however, becomes lower than the marginal damage when the market is not too large. Finally, when marginal environmental damage is not too low, the optimal tax leads to a green product monopoly.     

On the Regulation of a Vertically Differentiated Market

The aim of this paper is to investigate a vertically differentiated market served either by a multiproduct monopolist or by duopolists, in which a public authority aiming at increasing the welfare level can choose among two instruments, namely, quality taxation/subsidisation, and minimum quality standard. In the monopoly case they are equivalent as to the social welfare level, in that both allow the regulator to achieve the second best level of social welfare he would attain if he were to set qualities under the monopoly pricing rule, while they are not equivalent in terms of the distribution of surplus. In the duopoly regime, we show that there exists a taxation/subsidisation scheme inducing firms to produce the socially optimal qualites.     

The Role of United Charities in Fundraising: The Case of Singapore

Abstract: Theory suggests that a united charity helps to economize on fundraising costs by reducing competition for donations among member charities. However, donors often cannot control the allocation of their donations, and charities may dislike the monitoring of their activities. This paper examines these and other issues relating to the Community Chest of Singapore. The results, based on analysis of financial positions and fundraising costs of a large number of charities, suggest that the Community Chest does possess important fundraising advantages. Thus charities in financial difficulties or in need of funds for additional programs tend to seek membership. However, organizations that value their autonomy and independence, and that are able to achieve low fundraising costs tend to remain as non‐members. Thus a monopoly agency raising funds for all charities in the future is unlikely in the case of Singapore.     

Private patent protection in the theory of Schumpeterian growth

We develop a Schumpeterian growth model with privately optimal intellectual property rights (IPRs) enforcement and investigate the implications for intellectual property and R&D policies. In our setting, successful innovators undertake costly rent protection activities (RPAs) to enforce their patents. RPAs deter innovators who seek to discover higher quality products and thereby replace the patent holder. RPAs also deter imitators who seek to capture a portion of the monopoly market by imitating the patent holder's product. We investigate the role of private IPR protection by considering the impact of subsidies to RPAs on economic growth and welfare. We find that a larger RPA subsidy raises the innovation rate if and only if the ease of imitation is above a certain level. With regards to welfare, we find that depending on the parameters it may be optimal to tax or subsidize RPAs. Thus a prohibitively high taxation of RPAs is not necessarily optimal. We also show that the presence of imitation strengthens the case for subsidizing R&D.     

Market Power and Welfare in Electricity Markets Employing Tradable Green Certificate Systems

Within the last 25 years, liberalization (deregulation) of electricity markets around the world has been undertaken with the goal of replacing long-standing monopoly rights with fully competitive markets. In addition, many nations have begun employing “tradable green certificate” systems to promote electricity generation from renewable (“green”) energy sources (wind, solar, biomass, hydroelectric, etc.), with the primary objective of mitigation of greenhouse gas emissions from fossil fuel (“black”) producers. In this paper, we examine some welfare implications of the use of green certificate systems in electricity markets under alternative market structures. We demonstrate that under a wide variety of scenarios, an oligopolistic market structure may perform better in terms of welfare than a competitive market structure. We also demonstrate that there will typically be an optimal level of market power summarized by a conjectural variations parameter that depends on the cost structure of both green and black firms. Our model provides insights into the policy challenge of electricity market design and suggests an approach that could be applied in a more general model.     

市场过程内生的垄断:市场权势和自然垄断

作为内生的垄断现象,市场权势实际上是争胜竞争过程的结果,并非垄断的市场结构所决定。如果将竞争理解为一个动态过程,市场权势具有竞争性和暂时性。自然垄断现象也是市场过程演化过程中的自然现象,无论源于规模经济还是范围经济,都表明自然垄断具有动态效率特征。除非政府人为阻碍争胜竞争过程的展开,通常市场过程内生力量能够有效制约非政府垄断现象。     

房地产税、市场结构与房价

本文在住房流量模型的基础上,构建了一个购房者和开发商的住房市场局部均衡模型,考察了完全垄断和完全竞争情形下房地产税与房价之间的关系。结果表明,无论何种市场结构,提高房地产税均导致房价下降;住房市场垄断性越强,房价越高,房地产税对房价影响越大。笔者对1996-2008年中国33个大中城市数据的检验发现,市场结构对房价影响大于房地产税。房地产税增长率每增加1%,房价增长率将减少0.03%;勒纳指数每增加1%,房价增长率将增加0.16%。房地产税与市场结构相互作用将使房价上涨,但影响微不足道。因此,对住宅开征房地产税,将对房价上涨有一定限制作用,但不能有效抑制房价上涨,而增强住宅市场竞争性、降低开发商垄断具有显著效果。     

Market design with endogenous preferences

This paper explores the interdependence between market structure and an important class of cognitive biases. Starting with a familiar bilateral monopoly framework, we characterize the endogenous emergence of preference distortions during bargaining which cause negotiators to perceive their private valuations differently than they would outside the adversarial negotiation context. Using this model, we then demonstrate how a number of external interventions in the structure and/or organization of market interactions (occurring before trade, after trade, or during negotiations themselves) can profoundly alter the nature of these dispositions. Our results demonstrate that many such interventions frequently (though not always) share qualitatively similar characteristics to market interventions that are often proposed for overcoming more conventional forms of market failure. Nevertheless, our analysis underscores the importance of understanding the precise link between cognitive failures and market structure prior to the implementation of any particular proposed reform.     

流通产业组织结构优化中的自然垄断趋势

流通产业的组织结构是产业经济学关注的重要理论问题之一,人们或是根据产业组织学理论从商品流通企业的市场关系对其进行分析,或是从流通产业内部的资源配置结构及关联对其展开考察,或是在"结构、行为、绩效"框架下对其进行研究.其实,产业的组织结构涉及的层面很复杂,它与自然垄断之间有可能存在的关联尚未引起学者们应有的关注.本文认为,依据产业经济学对自然垄断的理解或定义,流通产业组织结构的优化与自然垄断之间存在着关联,这种关联可以通过流通产业运行的内部性和外部性予以揭示,对这种关联的分析,可以发现在流通产业组织结构的优化中蕴含着自然垄断的趋势.     

Strategic competition and optimal parallel import policy

Abstract In a two‐country Hotelling type duopoly model of price competition, we show that parallel import (PI) policy can act as an instrument of strategic trade policy. The home firm’s profit is higher when it cannot price discriminate internationally if and only if the foreign market is sufficiently bigger than the domestic one. The key mechanism in the model is that the home firm’s incentive to keep its domestic price close to the optimal monopoly price affects its behavior during price competition abroad. We also analyze the welfare implications of PI policies and show that our key insights extend to quantity competition.     

The Broadband Access Market: Competition,Uniform Pricing and Geographical Coverage

In this paper we analyze the market for broadband access. A key feature of this market is that it is considerably more expensive to connect consumers in rural locations than in urban locations. We show that while competition increases welfare compared to monopoly when prices are free to differ across locations, the opposite may be true if there is a requirement of uniform pricing across locations. Furthermore, we show that given uniform pricing, the regulator may increase consumer surplus as well as profit by requiring a higher regional coverage than the market outcome.     

跨国公司的市场行为:从垄断到竞争--以汽车工业为例

20世纪90年代中期前,一些外商投资企业垄断了中国同行业市场。之后由于国内同类竞争者的形成、多家跨国公司进入、进口商品大量增加等因素的影响,跨国公司对中国市场结构的影响开始向竞争性转变。这种转变给我们的启示是:跨国公司对东道国市场结构的影响不能纯粹的界定为垄断性或竞争性;引进外资时,不必担忧跨国公司在市场上会长期处于优势地位,他们对国内企业具有带动作用。