Voluntary Export Restraints and Economic Welfare: A General Equilibrium Analysis

We derive some sufficient conditions for the Suzumura-Ishikawa proposition on voluntary export restraints to hold when their model is extended to a general equilibrium framework. The sufficient conditions are concerned with the magnitude of income effects which play no role in the partial-equilibrium analysis of Suzumura and Ishikawa.     

The Economic Effect Of Competition Law Enforcement: The Case Of The Netherlands

Summary  In this paper we try to bridge the gap between the outcome ambitions of competition policy in terms of welfare gains and consumer surplus and the longer term effects of competition policy on growth and employment. First of all, an overview is given of the different definitions of welfare. We explain why maximising the consumer surplus is an important part of the mission statement for most competition authorities. In the second part of the paper we estimate the impact of the introduction of the competition law on economic development. The effects of antitrust policies, merger control and energy regulation on the consumer surplus appear substantial. This increase in consumer surplus can be interpreted as a cut in the “market power wedge” which, from a modelling point of view, is comparable to a cut in the tax wedge. A model simulation for the Netherlands shows that the economy responded positively to this increase in the consumer surplus. We find that production has grown by an extra 0.5% and that employment has increased by 0.4% as a result of the enforcement of the Competition Law. The authors are respectively Chief Economist of the NMa and senior advisor at the Office of the Chief Economist of the NMa. This paper is the background paper for the presentation with the same title at the conference “Measuring the Economic Effects of Competition Law Enforcement”, held in The Hague, 17 and 18 October 2007. The authors would like to thank two anonymous reviewers for their valuable comments and suggestions.     

Strategic Value Assessment and Explorative Learning Opportunities with Customers

This study recognizes that collaboration with customers for new product development may bring important financial benefits to firms, but at the same time may seriously hamper explorative learning. Many firms are approached by customers with requests to develop new products for them. While such requests may strengthen customer relationships and result in short‐term financial gains, it may force a firm in technologically undesirable directions. As a result, many firms struggle with the dilemma of, on the one hand, responding to customer requests, and on the other hand, safeguarding the long‐term competitive position of the firm. Firms with strong customer ties are particularly prone to this dilemma. Drawing on opportunity recognition literature, capability monitoring literature as well as goal setting theory, the authors have developed a framework arguing that Strategic Value Assessment (SVA) can help resolve this. SVA is defined as an a priori business evaluation of the value of a particular innovation collaboration, based on anticipated long‐term strategic benefits. It helps innovative firms to focus on collaboration with customers with lead user status and to develop intense relationships, allowing for more effective knowledge transfer and learning. The framework is tested using data collected from a sample of 136 business‐to‐business firms in the Netherlands. The sampling frame was a panel of small and medium‐sized high‐tech enterprises. The study finds positive direct and indirect effects of SVA on explorative learning. In addition, the findings show that the intense collaboration/learning relationship is positively moderated by customer lead user status, and negatively moderated by customer dependence. The findings suggest that SVA is a useful heuristic for managers to utilize opportunities for innovation involving collaboration with customers.     

The response of a small open economy to a disturbance

Zusammenfassung Die Reaktion einer kleinen offenen Volkswirtschaft auf eine St?rung. — Die moderne Au\enhandelstheorie besteht im wesentlichen aus zwei voneinander unabh?ngigen Teilen : die Tauschtheorie besch?ftigt sich mit den langfristigen Handels- und Investitionsstr?men, die monet?re Theorie mit den kurzfristigen Ver?nderungen in der Zahlungsbilanz. Es fehlt eine Theorie, in der reale und monet?re Faktoren wirklich miteinander verknüpft sind. In dieser Arbeit wird versucht, diesem Ziel ein wenig n?her zu kommen. Wir betrachten eine kleine offene Volkswirtschaft, ursprünglich in einem langfristigen Gleichgewicht, die einer einmaligen und unerwarteten St?rung unterworfen ist. Die daraus sich ergebenden ?nderungen der Faktorallokation und des Realeinkommens werden als gegeben angesehen, und es wird untersucht, welche induzierten Anpassungen in der Zahlungsbilanz oder dem Wechselkurs erfolgen. Unter anderem werden hinreichende Bedingungen für monotone Anpassungspfade und für ein “überschie\en” abgeleitet.

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Résumé La réponse d’une petite économie ouverte à une perturbation. — La théorie du commerce international moderne comprend deux parties essentiellement indépendantes: une partie de troc qui s’occupe avec les structures de commerce et d’investissement à long terme, et une partie monétaire qui s’occupe avec la conduitea à court terme de la balance des paiements. Ce qui manque est une théorie par laquelle les facteurs réels et monétaires sont véritablement entremêlés. Cet article prend un petit pas envers ce but. Nous analysons une petite économie ouverte, d’abord en équilibre à long terme, qui est touchée par une perturbation abrupte, unique et imprévue d’une sorte quelconque. Nous regardons la conséquente réallocation des facteurs et la variation du revenu réel comme donnée et analysons l’ajustement induit de la balance des paiements ou du taux de change. Inter alia, nous dérivons les conditions suffisantes pour les voies d’ajustement monotones et pour les phénomènes ?d ’overshooting?.

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Resumen Reacción a un ?shock? en una economía peque?a y abierta. — La teoría moderna del comercio internacional está compuesta de dos partes esencialmente diferentes: un componente de intercambio real que se ocupa de la estructura a largo plazo del comercio y de la inversión y un componente monetario que trata de la conducta a corto plazo de la balanza de pagos. Lo que falta, es una teoría en la que se encuentre una genuina fusión de factures reales y monetarios. Con este objetivo se estudia una pequefia economia abierta, inicialmente en equilibrio a largo plazo y que se ve de repente sometida a un ?shock? inesperado de cualquier tipo. Considerando como dados la consecuente realocación de recursos y los cambios en la renta real, se estudia el ajuste inducido de la balanza de pagos y del tipo de cambio. Entre otros aspectos, se derivan condiciones suficientes para la existencia de funciones monótonas de ajuste y de ?overshooting?.

     

Biological capital theory: a question and a conjecture

A community possesses an empty tract of land, good only for growing trees of a particular type. What is the optimal pattern of planting and harvesting? If utility is convex in consumption it is optimal to plant and harvest periodically. If the utility function is strictly concave our numerical analyses suggest that the forest approaches a balanced state in which the rate of timber production is uniform.     

A Dynamic Heckscher–Ohlin Model: The Case of Costly Factor Reallocation

The role of the static Heckscher–Ohlin model in providing general equilibrium comparative statics is emphasized. It is shown that (i) market-clearing dynamics can be constructed if and only if the costly reallocation of factors is accommodated, and (ii) the introduction of market-clearing and resource-using dynamics fails to sharpen (and may even blunt) the comparative statics. Thus, a new (non-)Correspondence Principle is derived.