A BARGAINING THEORY OF INEFFICIENT REDISTRIBUTION POLICIES*

When two policies are available to achieve the same goal why is the relatively inefficient one often observed? We address this question in the context of policies used to redistribute income towards special interest groups (SIGs) where in the first stage the constraints on policy instruments are chosen and in the second the government bargains with SIGs over the level of the available policies. Restrictions on the use of efficient policies and the use of inefficient ones reduce the surplus over which SIGs and governments can bargain but it also improves the government's bargaining position thus increasing its share of the surplus. The positive effect for the government dominates under plausible conditions. Inefficient policies are the equilibrium outcome under alternative policy selection mechanisms, e.g., election of policymakers and bargaining between SIGs and the government. The model also explains the coexistence of transfer policies. Moreover, we show why a weak government is more likely to choose the inefficient transfer and discuss how this result may be tested.     

A contribution to a multidimensional analysis of trade competition

International trade grew substantially throughout the last decades and international relations became more important for the economic performance of the countries. Simultaneously, new poles emerged in the international arena leading to growing competition for higher market shares. Therefore, trade competition is a critical dimension of analysis for applied international trade studies. We propose a conceptual framework for measuring this phenomenon by combining some critical previous contributions to build a multidimensional and more comprehensive concept, which defines trade competition as a function of the degree of both structural similarity and total exports overlap. Moreover, structural similarity should take into account three elements: sectoral shares similarity, inter‐sectoral similarity (evaluating how different the distinct sectors are) and intra‐sectoral similarity (proximity in terms of quality ranges exported). Several measures are proposed to empirically capture the concept suggested. Finally, we present an example including the exports of six European economies (Germany, France, the United Kingdom, Greece, Hungary and Sweden) to 124 destination markets (in 2007, 2011, 2015) in order to illustrate the application of the concept and measures suggested.     

Mergers & acquisitions research: A bibliometric study of top strategy and international business journals, 1980–2010

Mergers and acquisitions (M&As) are important modes through which firms carry out their domestic and international strategies and have been noted as the CEOs favorite strategy. As a significant field of study, M&A-research has accumulated substantial knowledge. This bibliometric study examines the extant strategy and international business literature on M&As. Methodologically, we examined a sample of 334 articles published in sixteen leading management/business journals, during a 31 year period — from 1980 to 2010. The results provide a global perspective of the field, identifying the works that have had the greater impact, the intellectual interconnections among authors and works, the main research traditions, or themes, delved upon on M&A-related research. Structural and longitudinal analyses reveal the changes in the intellectual structure of the field over time. A discussion on the accumulated knowledge and future research avenues concludes this paper.     

Evaluating Facilitated Modelling Processes and Outcomes: An Experiment Comparing a Single and a Multimethod Approach in Group Model Building

Facilitated modelling approaches have been suggested as helpful tools to support negotiation in strategic analysis processes due to their potential to facilitate cognitive change and enhance consensus and commitment with final decisions. In the present research, we developed an experimental framework to compare what two of these approaches, that is, group model building and a multimethod approach, contribute to the process and outcomes in the negotiation of strategies. In the multimethod approach, we combined strategic options development and analysis with computer simulations of the group model building approach. We explored the differences between these two modelling approaches in facilitating cognitive change, consensus and commitment by building an experimental research design with real clients, working on their organisation’s problem. Furthermore, we compared the type and content of participants’ contributions in the strategic conversation. The lessons from the experiment conducted are twofold. On one hand, the multimethod approach encouraged more divergent contributions and produced a higher degree of cognitive change than group model building (i.e., the single approach). On the other hand, group model building encouraged more contributions about content related to causes of the problem and enhanced more commitment to the final solution than the multimethod approach. Hence, the conducted experiment brings new insights into the benefits of using multimethods and possible losses resulting from such combinations. Accordingly, we have presented opportunities for further research regarding the combination of facilitated modelling approaches.     

Nowcasting unemployment rate and new car sales in south-western Europe with Google Trends

This work presents a study describing the use of Internet search information to achieve an improved nowcasting ability with simple autoregressive models, using data from four countries and two different application domains with social and economic significance: unemployment rate and car sales. The results we obtained differ by country/language and application area. In the case of unemployment, we find that Google Trends data lead to the improvement of nowcasts in three out of the four considered countries: Portugal, France and Italy. However, there are sometimes important differences in the predictive ability of these data when we consider different out-of-sample periods. For car sales, we find that, in some cases, the volume of search queries helps explaining the variance of the car sales data. However, we find little support for the hypothesis that search query data may improve predictions, and we present several possible reasons for these results. Taking all results into account, we conclude that, when Google Trends variables are significantly different from zero in-sample, they tend to lead to improvements in out-of-sample predictive ability. The results can have implications for nowcasting, by providing some indications regarding the advantage or not of the use of search data to improve simple models and indirectly by highlighting the sensitivity of the approach to the actual country-specific base, nowcasting period and search data.     

Tariff retaliation versus financial compensation in the enforcement of international trade agreements

We analyze whether financial compensation is preferable to the WTO's current dispute settlement system that permits injured member countries to impose retaliatory tariffs. We show that, ex-post, monetary fines are more efficient than tariffs in terms of granting compensation to injured parties but fines suffer from an enforcement problem since they must be paid by the violating country. If fines must ultimately be supported by the threat of tariffs, they fail to yield a more cooperative outcome than the use of tariffs alone. Furthermore, the exchange of bonds between symmetric countries also does not improve enforcement relative to retaliatory tariffs.     

New tests for stationarity and parity reversion: Evidence on New Zealand real exchange rates

The present paper discusses the stochastic stationarity of New Zealand exchange rates in light of new time series methods and new tests. The question of whether the real exchange rates have a unit root or are mean reverting is set in the general framework of fractionally integrated models. The estimates sustain the claim that New Zealand real exchange series are not stationary. However, it is shown that nonstationarity is compatible with parity reversion in the framework of fractional unit-root models.     

Manufacturing Skill‐biased Wage Inequality,Natural Resources and Institutions

We use an extensive dataset on occupational wages to measure the manufacturing skill premium and assess, for the first time, the influence of natural resources and institutional quality—in addition to traditional drivers—for advanced and less‐advanced countries and the full sample. The new findings, regarding 21 countries between 1988 and 2008 in the main panel estimations, suggest the premium of advanced countries rises with tertiary enrollment, net foreign direct investment (FDI) and institutional quality, and falls with centralized wage negotiations and geographically diffuse natural resource activities, mainly re‐exportation related. In less‐advanced countries, the premium rises with net FDI, scale effects, centralized wage negotiations and geographically concentrated natural resource activities (absorbing scarce skilled workers), and falls with trade, diffuse natural resource exploration (using mainly unskilled workers) and high‐technology exports, as emerging national low‐end technology industrial exporters may lower skill pay compared with foreign industrial exporters. In the full sample, the premium rises with scale effects, trade, institutional quality and concentrated natural resources, and falls with the relative skilled‐labor supply, centralized wage negotiations and diffuse natural resources. The results account for a wider diversity of situations compared with the previous studies.     

Crime and social norms

In this paper, we develop a general equilibrium model of crime. It is shown that law and norms are substitutes in achieving a stable equilibrium. Here we offer a new interpretation of different theories of social norms in the context of crime and deterrence. The law and economics theory is presented as an opportunism-limiting approach to norms whereas the evolutionary theory is presented as an opportunity cost approach.Received: January 2003, Accepted: July 2003, JEL Classification: D59, K14, K42Paper presented at the 3rd annual meeting of SPIE Portuguese Association for Research in Economics, June 22-23, 1998, Braga and at the 15th annual meeting of the European Association of Law and Economics, September 24-26, 1998, Utrecht. I am grateful to two referees and the editor for helpful comments that much improved the paper, and to Dorothea Kübler, Eric Posner, Dieter Schmidtchen, and Stergios Skaperdas for suggestions that much improved this paper, and to Kelly Markva for research assistantship. The author acknowledges the financial support of FCT, Lisbon, Portugal. Part of this paper was written while the author visited Stanford Law School. The usual disclaimer applies.