What is the Message of ‘Understanding the Process of Economic Change’ for Economic Historians?

This paper addresses Douglas North's latest book in the light of his intellectual lifework. North's original insistence upon the role of transaction costs did not require a departure from the neoclassical framework as clear-cut as the one required by North's latest emphasis on the role of intentionality. North's recent interest in the cognitive premises of institutional constraints to rational choice considerably expands the scope of the economic analysis of change. However, North still considers institutions supporting homo oeconomicus to be the most important progressive element in history. The paper argues that North's message goes beyond what he would be willing to transfer into the practice of economic historians. In particular, North's new conceptual framework should open the way to the acknowledgment that a plurality of progress-oriented institutions are possible, and that individualism itself could be seen as a multi-dimensional concept.     

Does Tariff Induce Intellectual Property Right Protection and Reduce Incidence of Piracy?

We consider a model with North exporting a copyrighted product to South where there is IPR violation, and South exports a basic good to North. We examine the impact of North's imposition of import tariff on South's monitoring of IPR violation and the incidence of piracy. If South values IPR compliance “lowly”, then tariff imposition do not alter the pre‐tariff no monitoring equilibrium outcome but unambiguously raises the incidence of piracy. If IPR compliance is valued “highly” then tariff either switches the equilibrium outcome from not monitoring to monitoring or increases its rate. However, the incidence of piracy may increase.     

Consumer confusion over the profusion of eco-labels: Lessons from a double differentiation model

How are eco-label strategies affected by consumer confusion arising from the profusion of eco-labels? This article provides a theoretical insight into this issue using a double differentiation framework. We assume that consumers perceive a label as a sign of quality compared to an unlabeled product, but that they cannot fully assess the environmental quality associated with each label and only see each label as a particular variety of a similar product. We analyze the pricing strategies of three firms, each one providing one product: a labeled product, with high or medium environmental quality, according to the eco-label, or an unlabeled product. We infer lessons for eco-labeling policies, according to the identity of the certifying organization: the regulator, an NGO or the firms. We show that the firm supplying the eco-labeled product with a high environmental quality is weakened by consumer confusion while the firm selling the unlabeled product suffers from strict labeling standards, to the benefit of the firm providing the labeled product with a lower environmental quality, which gains a competitive advantage. Most labeling policies consist of harmonizing labeling criteria, but only certification by a third party, the regulator or a NGO, guarantees the high environmental quality of labeled products, whereas certification by firms leads to a uniform undemanding standard. However, when both labels are provided by two different certifiers, including a firm, harmonization of environmental standards does not occur and the NGO's or regulator's eco-labeling standard will be much more stringent than the firm's one, preventing NGO's or public eco-labeling policy to significantly enhance quality of the environment and welfare.     

Understanding Douglass North in game-theoretic language

By using game-theoretic language, this paper attempts to interpret the North's recent framework for institutional studies. Particularly relying on a foundational study of knowledge and culture in epistemic game theory, it clarifies three subtly different meanings of the beliefs used by North – behavioral, cultural, and elites’ subjective – in the evolutions of institutions. It also suggests the ways to respond to the North's call for interdisciplinary approach by applying analytical tools of strategic complementarities and linked games.     

Endogenous Imitation and Technology Absorption in a Model of North–South Trade

Abstract

This paper considers the transfer of technology from the North to the South that occurs through trade in high-technology goods and explicitly models the ‘reverse-engineering’ process that allows the South to assimilate new technologies. A key finding of this study is that the South's rate of growth is dictated by the size of the country's human capital, which determines its absorptive capacity and its ability to assimilate knowledge from the North. We find that while a Southern country that is poor in human capital can only imitate, Southern countries that possess sufficiently large human capital endowments, beyond a certain threshold, signal the onset of innovation. We also find that the North enjoys a higher rate of innovation and growth with trade than without. North's gains are the highest when it trades with a human-capital ‘poor’ South, because imitation increases South's demand for Northern intermediates. But trade with the Southern countries that are human capital rich (and therefore involved in innovation), dampens their demand for Northern imports, adversely affecting North's growth. The model predicts growth convergence between the North and a South that is well passed the threshold for innovation.     

Technology transfer with transboundary pollution: A signalling approach

There are increasing complaints from the developing world that developed countries seem reluctant to transfer green technology, despite its benefits in helping to solve the climate problem. Identifying a signalling effect of technology transfer that was neglected by the previous literature, this paper offers a rationale for this reluctance in a North‐South model with transboundary pollution. In a benchmark case with complete information, the North makes complete technology transfer, leading to a Pareto improvement. However, if the North's valuation on climate damage is its private information, the North does not completely transfer the technology in “almost all” of the equilibria.     

The Issue of Efficiency and the Role of State in New Institutional Economics: A Critical Perspective

ABSTRACT

This article scrutinises and criticises the notion of efficiency and the role of state in the emergence and evolution of institutions and property rights within the tradition of new institutional economics. Specifically, the attempt is to criticise the efficiency view of the formation of property rights and institutions. It is shown that the efficiency concept cannot provide a sufficient rationale for explaining the origins of private property. Additionally, some recent developments of North's thought are critically scrutinised, showing that his theoretical apparatus could be conceived as a paradise for the eclectic. Further, the role of the state in different versions of the theory of property rights – with a special reference to North's treatment of the notion of state – is, also, critically examined. Although North’s work has virtues compared to the ‘naïve model’ of property rights by recognising and addressing the role of the state and the issue of power in the formation of property rights and institutions, he does not succeed in fully accounting for the existence of institutional arrangements, due to his adherence to an individualist framework.     

THE STRATEGIC ROLE OF INTERNATIONAL CREDIT AS AN INSTRUMENT OF TRADE*

This paper is an investigation of the role of international credit as a factor influencing the donor Countries' exports. Based on standard techniques of microeconomic theory, our model examines this relationship under different market structures in the industrialized donor country (North). Under monopoly and perfect competition, the availability of credit increases the North's exports; under oligopoly, within a class of parametric configurations, this relationship is reversed. We also find that, under certain conditions, if a developing country (South) takes recourse to international credit to finance its imports, it would end up worse off, that is the availability of international credit can be welfare-decreasing for the borrowing nation.     

Product cycles among three regions with differential R&D abilities

I extend the North–South product cycle model of Grossman and Helpman [Grossman, G. and Helpman, E. (1991b), “Endogenous Product Cycles,” Economic Journal, 101, 1214–1229.] to a three-region model where the region Middle undertakes both innovating and imitating activities in a trading equilibrium. In contrast to Grossman and Helpman [Grossman, G. and Helpman, E. (1991b), “Endogenous Product Cycles,” Economic Journal, 101, 1214–1229.], I find that an expansion in the North's labor force or a rise in the productivity of the North's labor in the research sector incurs no effect on the rate of the South's imitation. Moreover, the long-run relative wage of a region can vary inversely with the size of that region.     

Licensing technology to shape standards: Examining the influence of the industry context

Technology standards refer to particular technological solutions, which emerge as the accepted approach to fulfill a particular function. In light of the growing importance of technology standards and network externalities, industrial firms may not only adopt emerging standards, but they can actively shape the standardization processes based on their forecasting activities. One important means to influence standard setting towards a firm's own technology is to foster the technology's adoption by actively licensing it to other organizations. Thus, industrial firms may license technology in order to enhance their future new product performance based on a standard related to their technology. To shed light on these dynamics of standardization processes, we draw on contingency theory and conceptually examine the role of licensing in the emergence of technology standards. We further use new data from two surveys of 79 industrial firms with a three-year lag to analyze how environmental contingency factors related to appropriability, i.e., patent protection and technological turbulence, moderate the relationship between licensing to shape technology standards and a firm's subsequent innovation performance. The data provide strong support for the importance of shaping standards by licensing technology, and the findings have important implications for research into standards, licensing, and appropriability.     

Innovation,Imitation, and Intellectual Property Rights with International Capital Movement

This paper extends the established Helpman (1993 ) model by introducing international capital movement, and obtains new results concerning the welfare implications of tightening intellectual property rights (IPR) in the South. First, if separated capital markets in the North and the South are integrated, enforcement of IPR would have more desirable welfare effects in both regions. Second, when international capital movement is allowed, the North always gains from the tightening of IPR if the imitation rate is sufficiently high. This implies that the North's demand on the South to tighten IPR becomes stronger as the integration of international capital markets progresses.     

Standards Migration and Peripheral Competition

The impact of competition from peripheral firms on the standards migration efforts by integrated systems firms with de facto standards control is investigated. When systems firms try to migrate their customers to a new standard, they can lose some control over their installed base because they are constrained in their product offerings. Peripherals firms do not face such constraints. Their product offerings allow the emergence of hybrid systems which systems firms are unwilling to match. Improved peripherals from independent firms make these hybrid systems possible. Such hybrid systems lengthen the economic life of the products that make up the existing standard. Historical and empirical evidence from the mainframe computer industry in the 1960s and 1970s illustrates the competition from peripheral firms and their impact on IBM's standards migration efforts. IBM pursued the establishment of a new de facto standard, while independent disk drive manufacturers supplied peripherals that enabled hybrid systems. For the computer mainframe industry, it was shown that those hybrid systems increased the economic life of IBM's older computers, although IBM was able to migrate its customers to the new standard in this case.     

Gradual globalization and inequality between and within countries

Abstract.  This paper investigates the effects of gradual trade liberalization on intra‐country and inter‐country inequality. It assumes two countries, North and South, and two factors, skilled labour and unskilled labour. North is defined as the one that is relatively skilled‐labour abundant and larger. A marginal trade liberalization from autarky is shown to (a) increase (decrease) in skilled‐unskilled wage differential in the North (South) and (b) raise the inequality between North and South. As the global economy approaches free trade, a marginal trade liberalization has effects, which are the opposite of (a) and (b); that is, the relative wage falls in the North and rises in the South, and North‐South inequality decreases.     

On the North-South trade in the Americas and its ecological asymmetries

There has been a long and intensive debate within the scientific community about the role of international trade in the development of countries. During the last decades, the focus of attention has moved from the pure economic level to the environmental aspects of international trade. Establishing a simplified system of North-South trade for one reference period (2003), this paper attempts to test empirically the extent of potential asymmetries with regard to extracted material flows, and contrasts the results with the economic benefits from trade (in terms of value-added). The South is thereby represented by a selection of Latin American countries (Brazil, Chile, Colombia, Ecuador and Mexico), the North comprises one of their main commercial partners, the United States. At the methodological level, a multi-regional input-output analysis is used as the tool of investigation. Results generally support the hypothesis that the South was feeding the North's societal metabolism. South-North material exports were 1.6 times larger than North-South material exports, resulting in a net deficit for the South of 324 million tons. Moreover, material intensity of exported commodities from the South was twice as high as that from the North. It is worth highlighting, however, that part of the North-South hypothesis fails for the sample of countries since the larger part of the economic surplus has remained in the South, contrarily to what would have been expected.     

Knowledge positions in high-tech markets: Trajectories,standards, strategies and true innovators

Essential patents refer to patents that are indispensable in order to make any product that complies with a technological standard. Portfolios of essential patents have often been used to indicate the strategic value of a firm's knowledge. We propose a range of alternative indicators based on a firm's position in patent citation network. Using a historical narrative and the actual licencing payments for the 3G W-CDMA standard in mobile telecommunications as a reference, we find that our alternative indicators provide better indicators for firms' knowledge positions and their long-term impact on technological change. Our proposed indicators can also be applied in markets that are not based on standards, and may not only be valuable to scholars but also to practitioners. Our findings also raise some concern over technology inclusion processes at standards bodies, and we recommend policy makers to consider our proposed method in order to critically look at these processes.     

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.     

MULTIPOLLUTANT EFFICIENCY STANDARDS FOR ELECTRICITY PRODUCTION

This study contains a simulation of a coal-fired electric plant subject to multiple pollutant standards for SO₂ and NO _x . It shows that firms may not choose the lowest cost technology. The firm's cost-minimizing choice is compared for three increasingly stringent standards: the 1990 Clean Air Act Amendments, the 1997 New Source Performance Standards, and the 2002 North Carolina Clean Smokestacks Act. The study finds support on cost-benefit grounds for the 2002 North Carolina standard, which is the most stringent standard, but not for the 1997 NSPS. (JEL Q28 , Q25 , L94 )     

中国农食产品标准国际化能否提升出口产品质量?

执行国际标准能够促进产品质量提升,但也会给企业带来过高的遵从成本,从而可能不利于企业产品质量的提升。选取2000-2013年中国农食产品标准数据与企业-产品层面海关数据,实证分析中国农食产品标准"国际化"对企业出口产品质量的影响。结果显示:从整体来看,标准"国际化"对企业出口产品质量效应显著为负,而我国自行制定的国家标准对质量影响显著为正;按照对国际标准采纳程度分类,以及对出口产品和出口目的国发展程度分类,分样本检验发现,标准"国际化"对企业出口产品质量存在异质性影响。为此,照搬发达国家主导制订的国际标准不适用于中国出口企业,可能会由于过高的遵从成本阻碍企业产品质量升级。另一方面,以中国为代表的发展中国家需积极参与到国际标准的制定中,从而减少过高遵从成本对产品质量升级及出口带来的不利影响。     

Environmental efficiency and regulatory standards: the case of CO2 emissions from OECD industries

It is generally accepted that production processes should take into account environmental sustainability principles. Hence, any attempt to measure the performance of these processes should highlight, as a reference standard, those processes that combine greater amounts of desirable production with lower levels of undesirable outputs, e.g. waste generation or emissions of greenhouse gases. Using this concept of environmental performance, it is possible to establish efficiency scores within a Data Envelopment Analysis (DEA) framework, and to calculate desirable output losses when specific environmental standards on undesirable production are set by the authority, i.e. legislative opportunity costs. This can be achieved by solving programming models that call for a reduction of undesirable outputs and that stress the weak disposability of such outputs. Once a standard is set, it congests or binds the technology if the reductions in undesirable production required to meet it imply lower desirable output levels, i.e. the regulation is costly. DEA enables us to simulate, for each producer, the effect of any regulatory standard on production, and the limits beyond which production is impossible — lower limits, or superfluous — upper limits, because the chosen standard does not bind production. The empirical implications of the DEA process are analyzed considering different regulatory scenarios on CO₂ emissions for the Organization for Economic Cooperation and Development (OECD)'s manufacturing industries.