Consumption effects of genetic modification: what if consumers are right?⋆

This paper develops a model of differentiated consumers to examine the consumption effects of genetic modification (GM) under alternative labelling regimes and segregation enforcement scenarios. Analytical results show that if consumers perceive GM products as being different than their traditional counterparts, GM affects consumer welfare and, thus, consumption decisions. When the existence of market imperfections in one or more stages of the supply chain prevents the transmission of cost savings associated with the new technology to consumers, GM results in welfare losses for consumers. The analysis shows that the relative welfare ranking of the ‘no labelling’ and ‘mandatory labelling’ regimes depends on: (i) the level of consumer aversion to GM products; (ii) the size of marketing and segregation costs under mandatory labelling; (iii) the share of the GM product in total production; and (iv) the extent to which GM products are incorrectly labelled as non‐GM products.     

A Second Elementary Proposition Concerning the Formation of Customs Unions

The conclusions of the 1976 Kemp–Wan proposition are shown to be valid even if, after the formation of a customs union, the tariff vectors of some non-member countries are optimally chosen.
JEL Classification Numbers: F02, F12, F13, F15.     

TO TAX OR NOT TO TAX? THE CASE OF ELECTRONIC COMMERCE

Despite the intensifying debate over the taxation of Internet commerce, the relevant issues have not been given a systematic treatment in the context of the literature on optimal taxation. This article presents such an analysis and investigates separately the taxation of business purchases of intermediate goods, the taxation of consumer purchases of final goods and services, and the various issues of administration and compliance costs as they apply to the development of E-commerce. The authors conclude that generally the optimal tax literature cannot be used in support of a blanket tax exemption for Internet purchases. Certain conditions could lead to the optimality of an exemption, but those conditions are not likely to be met in practice.     

A Theory of Voluntary Unrequited International Transfers

This paper proposes a theory of voluntary unrequited international transfers which explicitly allows for an international externality such that the well being of each country is influenced by the well being of other countries. Formulating a simple two–country and two–commodity model, this paper shows that (a) either neither country extends aid to the other, or one country extends aid and both countries benefit from the aid; and (b) there exist acceptable (Arrow–Debreu) economies such that neither country extends aid to the other, and there exist acceptable economies such that one country extends aid to the other.
JEL Classification Numbers: F11, F35.     

Factor Price Equalization in a World of Many Trading Countries

Conditions sufficient for factor price equalization within any non‐trivial subset of trading countries are provided. The conditions are that (a) the factor endowment ratios of countries in the subset are all bounded by the factors‐in‐use ratios in an equilibrium of the hypothetical world economy in which factors are perfectly mobile within the subset, and that (b) in dimensions higher than two, either the rank of the factors‐in‐use matrix is 2 or products do not outnumber factors and the factors‐in‐use matrix is of full rank.     

On the distance between cross-impact models: A set of metric measures for cross-impact analysis

This paper attempts to add to the Leibnizian or mathematical side of Technological Forecasting. Given two distinct cross impact models, the paper shows that there exists a set of appropriate metric measures such that the distance between any two cross impact models can be determined. That is, it is possible to say how close or how far apart two or more cross impact models are to one another. It is argued that the ability to make such determinations is vital to the formal and mathematical development and growth of Technological Forecasting.