Incumbency and market share within European mobile telecommunication networks

The structure of mobile telecommunication markets varies considerably across Europe, ranging from monopolies with a handful of subscribers to markets with five operators and many millions of subscribers. Where competitive markets occur, there is also an incumbent operator possessing substantial first mover advantages. This paper explores these advantages, asking whether the incumbent has remained the largest operator as the market has developed. This question is investigated using data from 49 European countries. The analysis finds that in most countries the incumbent continues to be the largest operator measured by market share. In some countries, later entrants into the market have struggled to gain market share, contributing to the highly concentrated nature of many mobile markets. The extent to which the geographical footprint of an operator influences its market share is also examined.     

Reviewing Proposals for a World Environmental Organisation

Since the Earth Summit in Rio 1992, several calls have been made for a world environmental organisation (WEO), and only during the last year, in the run‐up to Rio+10, five more have been added. In total, we have found 17 proposals for a WEO. We review, compare, and briefly discuss rationales, models, tasks, organisational set‐up, relations to multilateral environmental agreements (MEAs) and organisations such as UNEP and the WTO, as well as the role of principles, compliance and the interest of developing countries. We conclude that a majority of proposers is in favour of an autonomous coordinating agency, that is, a medium level of integration. Frequently the WTO is mentioned as a precursor agency on which a WEO should be based. We question the effectiveness of a ‘WTO for the environment’ and suggest that other models ought to be considered.     

Developing-Country Benefits from MFN Relative to Regional/Bilateral Trade Arrangements

Using a general‐equilibrium model of world trade, this paper evaluates the benefits of most‐favored‐nation (MFN) treatment to developing countries in multilateral relative to bilateral or regional trade agreements, from three sources. First, developing countries may be able to free‐ride on bilateral tariff concessions exchanged between larger countries in MFN‐based GATT/WTO rounds. Second, MFN benefits developing countries by restricting discriminatory retaliatory actions by other countries, evaluated here by a non‐ cooperative Nash tariff game. Finally, MFN changes threat points in bargaining and hence affects the bargaining solution of multilateral MFN‐based trade negotiation compared to a bilateral/regional arrangement. The authors find that the benefits to developing countries are small in the first case as the tariff rates are already low, and the benefits are small in the second case as the optimal tariffs under unconstrained retaliation are not very asymmetric. Benefits from the third case are large as large countries can extract large side‐payments if they bargain bilaterally.     

Replacing the U.S. income tax with a progressive consumption tax: A sequenced general equilibrium approach

This paper examines the welfare consequences of changing the current U.S. income tax system to a progressive consumption tax. We compute a sequence of single period equilibria in which savings decisions depend on the expected future return to capital. In the presence of existing income taxes, the U.S. economy is assumed to lie on a balanced growth path. With the change to a consumption tax, individuals save more and initially consume less. As the capital stock grows, consumption eventually overtakes that of the original path, and the economy approaches the new balanced growth path with higher consumption and a greater capital stock. Both the transition and the balanced growth paths enter our welfare evaluations. We find the discounted present value of the stream of net gains is approximately $650 billion in 1973 dollars, just over 1 percent of the discounted present value of national income. Larger gains occur if further reform of capital income taxation accompanies the change. We examine the sensitivity of the results, both to the design of the consumption tax and to the values of elasticity and other parameters. The paper also contains estimates of the time required to adjust from one growth path to the other.     

Structural adjustment in the Latin American and African mobile sectors

In recent times, there has been much discussion about structural changes taking place on the mobile front in Europe and the USA but rather little on developments elsewhere. However, it is in Latin America and Africa where the structure of the mobile sector has recently been undergoing the most rapid and unprecedented change. This paper sets out to explain what has happened in each case covering the period to end-2005, to explain the underlying rationale and to seek finally to answer the question whether there is a common pattern in both cases or whether they are essentially independent.     

Optimal partial hedging of options with small transaction costs

This study uses asymptotic analysis to derive optimal hedging strategies for option portfolios hedged using an imperfectly correlated hedging asset with small fixed and/or proportional transaction costs, obtaining explicit formulae in special cases. This is of use when it is impractical to hedge using the underlying asset itself. The hedging strategy holds a position in the hedging asset whose value lies between two bounds, which are independent of the hedging asset's current value. For low absolute correlation between hedging and hedged assets, highly risk‐averse investors and large portfolios, hedging strategies and option values differ significantly from their perfect market equivalents. © 2011 Wiley Periodicals, Inc. Jrl Fut Mark 31:855–897, 2011     

Exploring policy options in joint intertemporal-spatial trade models using an incomplete markets approach

In this paper we discuss the desirability of service trade liberlization in the presence of incompleteness of markets where there is both inter-spatial and intertemporal trade between countries. We use numerical simulation methods for insights and relate our discussion to the General Agreement on Trade in Services (GATS) in the WTO. We interpret the absence of intertemporal trade as an absence of intermediation services provided by both domestic and foreign service providers. For simplicity, we consider extreme cases where intertemporal intermediation services can only be provided by domestic providers, so that when intertemporal trade in services is not allowed, markets are not complete. To our knowledge, this type of models is not used in the trade literature as general comparative statics results are unavailable. We first consider the liberalization of trade in financial services in an inter-spatial and intertemporal model of two countries, and we show how services liberalization can be welfare worsening in the presence of a tariff on spatial trade in goods. We show that this can hold in an artificial world with no domestic financial services provider. We compare financial service trade autarky in which there is no intermediation to financial service trade liberalization which involves costless intertemporal intermediation provided by foreign service providers. We also consider a more complex (and realistic) world where costly intermediation services can be provided by both domestic and foreign providers. This paper draws in part on material of an earlier paper, “Financial Services Trade Liberalization in A Joint Spatial Intertemporal Multi-Country Model” by Huang et al. (2004). We acknowledge the financial support from The Centre for Intentional Governance Innovation (CIGI), Waterloo, Canada and from National Social Science Foundation of China (SSFC Grant 07AJL002), National Natural Science Foundation of China (NSFC Grant 70825003) and “Humanities and Social Science” Major Project, Chinese Ministry of Education (Grant Number 07JJD790145).     

How reasonable are assumptions used in theoretical models? Computational evidence on the likelihood of trade pattern changes

Abstract .  In theoretical literature it is common to make the assumption that in a multi-country, multi-good world, the direction of trade (import and export by commodity) is predetermined and fixed for each good for each country. We consider a simple three-country, three-good, pure-exchange model with CES preferences. We compute free trade competitive equilibria, three-country non-cooperative Nash equilibria, and customs union equilibria for randomised parameterizations, and find that trade pattern changes between free trade and customs union equilibria in around 35% of cases.