De-industrialisation and the balance of payments in advanced economies

This paper defines de-industrialisation as a secular declinein the share of manufacturing in national employment. De-industrialisation,in this sense, has been a widespread feature of economic growthin advanced economies in recent decades. The paper considersbriefly what explains this development and quantifies some ofthe factors responsible. It then examines the experience ofBritain and America, which are two countries that have combinedrapid de-industrialisation with a strong overall economic performance.The paper considers both the domestic situation of manufacturingindustry in these countries and its foreign trade performance.It concludes by examining in detail the British balance of payments,and documenting how improvements in the non-manufacturing spherehave helped offset a worsening performance in manufacturingtrade.     

The Year in Review: Economics at the Antitrust Division, 2006–2007

In this paper, we evaluate the scope of Chadwick’s claim on the superiority of competition for the market over competition in the market under incomplete information. We firstly characterize the expected outcome achieved under competition in the market at a Cournot Bayesian-Nash equilibrium. Then we characterize the optimal expected outcome achieved under a competition for the market mechanism designed by a government facing a shadow cost of public funds. We show that a regulated monopoly selected by an auction mechanism results in higher expected welfare than does duopoly competition when the entry cost is low but that the opposite holds when the market size is small and the entry cost is high for some values of the shadow cost of public funds. These results are explained by the influence of adverse selection on the entry decision at the Cournot equilibrium and by the level of expected total fixed costs in both mechanisms.