Modelling non-competitive behavior in commodity markets: A game theoretic approach

In this paper, we provide a coalitional alternative to the perfectly competitive and purely non-cooperative assumptions commonly employed in the modelling of commodity markets. These assumptions of perfect competition or pure non-cooperation are usually imposed exogenously without providing an economic basis for assuming why firms that could stand to gain by cooperating would not in fact do so. Three behavioral rules embodied in three different cooperative games are discussed in this paper and a methodology for predicting the coalition structures that would result from each of these is offered. By applying these games to the US copper industry of the 1970's, we show that the theory of games can be profitably employed in conjunction with the traditional institutional approach of industrial organization to yield useful economic predictions.The author is grateful to two anonymous referees whose comments led to a considerably improved version of the paper.     

THE ROLE OF EXCHANGE RATE IN SINO-U.S. BILATERAL TRADE

We use the error component two-stage least squares estimation method to examine the effects of the Sino-U.S. exchange rate and the weighted exchange rate between the United States and other Asian countries on the Sino-U.S. trade patterns. Our study suggests that both the exchange rates have contributed to China's increased trade surplus with the United States. China has imported intermediate goods from the Asian countries, produced final goods using its cheap labor, and exported those goods to the United States. This is especially true for bilateral trade of high-tech manufacturing goods. Our study also reveals that the U.S. bilateral trade balance could improve if China appreciates its currency (Yuan) against the U.S. dollar. ( JEL F14, F10, F19)     

Price Discovery and Risk Transfer in the Crude Oil Futures Market: Some Structural Time Series Evidence

This paper re-examines the Garbade and Silber (1983) model with the objective of finding out if the crude oil futures market performs the functions of price discovery and risk transfer. The model is estimated, using daily data, as a system of two seemingly unrelated time series equations allowing the coefficients to be time-varying. The empirical results reveal that the futures market performs about 60 per cent of the price discovery function, and that the elasticity of supply of arbitrage services is adequately high for the market to perform the risk transfer function.
(J.E.L: G13, C22).     

Discriminating Among Alternative Theories of the Multinational Enterprise

Recent theoretical developments have incorporated endogenous multinational firms into the general–equilibrium model of trade. One simple taxonomy separates the theory into "vertical" models, in which firms geographically separate activities by stages of production, and "horizontal" models, in which multiplant firms duplicate roughly the same activities in many countries. The authors nest a horizontal and a vertical model within a hybrid (unrestricted) "knowledge–capital model" and estimate the specifications with data on US foreign direct investment activity. In the nested econometric tests, the data sample cannot distinguish statistically between the unrestricted model and the restricted horizontal model, indicating that the latter captures virtually all of the determinants of FDI. The tests overwhelmingly reject the vertical model.     

Hedonic models and air pollution: Twenty-five years and counting

This paper reports a meta analysis of how effectively hedonic property models have detected the influence of air pollution on housing prices. Probit estimates are reported describing how data, model specification, and local property market conditions in cities represented in thirty-seven studies influence the ability of hedonic models to uncover negative, statistically significant relationships between housing prices and air pollution measures.Partial support for this research was provided by the Russell Sage Foundation. Thanks are due David Cordray, Heidi Hartman, and Larry Hedges of the Foundation's Meta-Analysis Panel for constructive comments, to Ray Palmquist for suggestions and assistance in assembling the results from his studies, to Rick Freeman and Tom Tietenberg and two anonymous referees for comments on the research, and to Barbara Scott for constructive editing of earlier drafts of this paper.     

A bioeconomic model for estimating the optimal level of deer and tag sales

This paper presents a dynamic model that determines the optimal number of deer hunting permit sales, subject to the objective of maximizing the discounted economic benefits stream from both the consumptive and nonconsumptive uses of deer. This bioeconomic model integrates economic benefits estimated using the dichotomous choice contingent valuation method with biological growth constraints on deer. Using a hunting zone in California as a case study, the model found that the optimal levels of buck hunting permits sold should change on a rotational basis over time and that the current practice of not selling doe hunting permits for that zone is non optimal.