The Supporting Line Property and the Additive Choice Function for Two-Dimensional Choice Problems

The paper provides an axiomatic characterization of the additive choice function using the additivity property. It is seen that, along with Pareto optimality, symmetry, and a supporting line property, the additivity axiom uniquely characterizes the additive choice function. The additive choice function as defined in this paper does not satisfy Nash's assumption of the independence of irrelevant alternatives. This raises the question of when a choice function is representable, an issue addressed in an appendix.     

Foreign Aid as Prize: Incentives for a Pro-Poor Policy

The authors develop a theoretical model of foreign aid to analyze a method of disbursement of aid which induces the recipient government to follow a more pro-poor policy than it otherwise would do. In their two-period model, aid is given in the second period and the volume of it depends on the level of well-being of the target group in the first period. They find that this way of designing aid does increase the welfare of the poor. They also consider the situations where the donor and the recipient governments act simultaneously as well as sequentially, and they find that, by moving first in a sequential game, the donor country can, under certain conditions, increase the welfare of the poor and that of its own country compared to the case of simultaneous moves.     

"Export Experience" under Borrowing Constraints

The paper develops a two‐period, two‐country, multigood model with endogenous investment. Borrowing is subject to quantitative restrictions. The authors examine the effect of promoting exports in period 1 on the level of exports in period 2. They consider a number of scenarios depending on how the initial values of the policy instruments are determined, and compare the “export‐experience” effects under the different scenarios.     

Trade and domestic tax reforms in the presence of a public good and different neutrality conditions

This paper develops a perfectly competitive general-equilibrium model of a small open economy with production of private traded goods and of a public good which is financed by revenues from trade and domestic taxes. Within this framework we consider the effects on public good provision and on welfare of the following tax reforms: (i) a producer-price-neutral reduction in export taxes and a corresponding increase in production taxes, (ii) a consumer-price-neutral reduction in tariffs and a corresponding increase in consumption taxes, and (iii) a partial tax-revenue-neutral reform in trade and domestic taxes.     

Cost heterogeneity and the destination of Japanese foreign direct investment: A theoretical and empirical analysis

This paper first of all develops a Cournot oligopolistic model with heterogeneous firms to examine each firm's choice between export-oriented foreign direct investments (FDI) and FDI to serve the host-country market. It is shown that there exist a critical level of efficiency such that all firms below that level choose the former and those above it the latter. The hypothesis is tested using firm-level data on 118,300 Japanese firms covering the entire manufacturing sector. Multinomial logit estimates strongly support our theoretical findings.