The Le Châtelier Principle in the Theory of International Trade

This paper shows in a general framework the broad applicability of the Le Chatelier Principle in international trade theory and policy. By stressing the formal similarity between a small open economy and a price taking multi-product firm, the paper generalises earlier applications of the Le Chatelier Principle in the trade literature. In addition, it is shown how some of the Le Chatelier results, which in their established form are locally valid only, can be generalized to discrete parameter changes.     

Transparency in the Foreign Exchange Market and the Volume of International Trade

In this paper we study the impact of more transparency in the foreign exchange market on the ex ante expected volume of international trade. Transparency is measured by the informational content of publicly observable signals. These signals convey information about the use of policy instruments which affect the future exchange rate. We find that a higher level of transparency may increase or decrease the volume of international trade. In particular, the impact of greater transparency depends on the curvature of the firms’ marginal cost function. Furthermore, the firms’ex ante expected profits are higher when the foreign exchange market is more transparent.     

Budget Incidence Reconsidered

The paper develops a theoretical framework for analyzing budget incidence. The welfare gain of consuming a public good is determined by the benefit approach. On this basis the incidence of taxation, benefits and net benefits is investigated. Measures of progression are proposed. It is shown that the joint incidence of governmental taxation and expenditure can be related to residual progression and the income elasticity of the marginal willingness to pay for the public good. An example demonstrates that progressive taxation can be overcompensated by a distribution of benefits which favors the rich.     

Asymptotic seat bias formulas

Apportionment methods are used to round the vote proportions of parties in a proportional representation system to integer numbers of seats in the parliament. Seat biases quantify by how much on average a particular apportionment method favors larger (or smaller) parties. In this paper, we prove a previous conjecture on asymptotic seat biases of stationary divisor methods and the quota method of greatest remainders, as the size of the parliament tends to infinity.     

Sequential Generalized Lorenz Dominance and Transfer Principles*

In an important contribution in 1987, Atkinson and Bourguignon proposed dominance criteria which allow us to compare income distributions for heterogeneous populations. They are defined by the unanimous preference of the dominating distribution by a set of welfare functions which satisfy some conditions on the derivatives of utility‐of‐income functions. This paper contributes to an understanding of some of the orderings considered. In particular it provides a characterization of the sequential generalized Lorenz ordering by transfer principles. The axiomatization illuminates the criterion.     

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