FREE TRADE NETWORKS WITH TRANSFERS*

We investigate the network of bilateral free trade agreements (FTAs) in the context of a network formation game with transfers. In a previous paper we showed that without international transfers countries with different industrialization levels cannot sign an FTA, so that the global free trade network, in which every pair of countries signs an FTA, is not in general pairwise‐stable. In this paper we show that, even if the world consists of fairly asymmetric countries, the global free trade network is pairwise‐stable when transfers between FTA signatories are allowed. Moreover, it is a unique pairwise‐stable network unless industrial commodities are highly substitutable.     

EMERGENCE OF LEADERSHIP IN TEAMS*

This paper provides a simple model to explain the emergence of leadership in an unstructured team. Each agent has partial information about the productivity of the team. Each agent may invest a productive effort in one of two periods. If one agent voluntarily moves first and the other waits for the second period, and if the first‐move action successfully transmits his type, the first mover effectively exercises leadership in affecting the effort choice of the second mover. We prove that, if each agent holds stochastically independent information, leadership emerges with positive probabilities in Cho–Kreps stable outcomes.     

BOEKE'S VIEW OF EASTERN SOCIETY — With Special Reference to His Critics —

Today those who characterize the economy of underdeveloped areas by the coexistence of a modern sector and a pre-modern sector within one political unit tend to refer to J. H. Boeke as a pioneer exponent in theorizing this dualism. But his dualism differs from the economic dualism of this sort. Again it differs from the so-called sociological dualism, despite his emphasis on social dualism. By confusing theoretically social dualism with economic dualism, he advocates in effect what is called a socio-economic approach. Inspite of Boeke's logical inconsistency abundant in his theorizing, what he was virtually claiming in order to find the real cause of economic stagnation in Eastern colonial society was the importance of making searching inquiry into the structural interrelationship between economic factors and social factors.     

WELFARE LOSSES FROM NON‐TARIFF BARRIERS: THE JAPANESE BEEF QUOTA CASE*

A standard method of estimating deadweight losses caused by import quotas is to estimate a utility function by data over a period in which the quota is not imposed, and to use the estimated utility function to evaluate the virtual price of quota‐laden imports. This method, however, is not applicable if preferences are different between quota and non‐quota periods. In order to overcome this difficulty, the present study introduces a method of estimating a utility function directly from data in a quota period. This method is applied to the estimation of deadweight losses attributable to the Japanese beef quota.     

Voluntary Participation and Provision of Public Goods in Large Finite Economies

We consider a public good provision game with voluntary participation. Agents participating in the game provide a public good and pay the fees according to a mechanism (allocation rule), while nonparticipants can free‐ride on the participants. We examine how the equilibrium public good provision level is affected by enlarging the population of an economy. We introduce a condition for an allocation rule, the asymptotic uniform continuity in replication (AUCR), which requires that small changes in the population must yield only small changes in the public good provision and which is satisfied by many mechanisms. We show that under AUCR, the equilibrium level of the public good converges to zero as the economy is replicated in the sense of Milleron.     

EFFICIENT MIXED CLUBS: NONLINEAR-PRICING EQUILIBRIA WITH ENTREPRENEURIAL MANAGERS

Scotchmer and Wooders show that efficient clubs are homogeneous when consumers are divisible in Berglas's anonymous crowding model. However, if consumers are not divisible or if clubs have multiple facilities with economies of scope, mixed clubs are efficient. In such a model, we consider clubs with multiple membership policies for different types of consumers, and show the existence and efficiency of equilibrium with nonlinear policies. We employ entrepreneurial equilibrium, all equilibrium concept with profit-seeking entrepreneurs. Our theorem can be regarded as showing the existence of a core allocation that satisfies envy-free property in the absence of non-anonymous crowding effects.     

THE RISE OF LABOR MOVEMENTS AND THE EVOLUTION OF THE INDONESIAN SYSTEM OF INDUSTRIAL RELATIONS: A CASE STUDY

This study analyzes a case of labor conflict at a garment company in West Java with particular reference to the rules and strategics among the parties involved. Using game theory, the study analyzes the formation of the critical point of labor conflict and examines the negotiations that led to the formation of stable industrial relations. At that point, the Nash equilibrium was at the company strategy of collaboration and at the workers' strategy of hostility, the company having assumed that the workers would mount a strong resistance to the company's hostile strategy. Under circumstances of weak law enforcement, the effective strategy for the workers was not only to obtain knowledge concerning the law but also to gain the support of the community, as well as solidarity among union members, and to pursue creative strategies. This study also shows that an important rule for stabilizing industrial relations is continual communication among the company, labor unions, and the members of the workers' organizations.