Why will Trump lose the trade war?

ABSTRACT

The escalating U.S.–China trade conflicts have increasingly shadowed the outlook of the world economy. The Trump administration aims to achieve its strategic goals including reducing current account deficits, promoting the U.S. manufacturing sector, and curbing Chinese high-tech industries by waging the trade war against China. This paper argues that the current account deficits and the declining manufacturing sector in the U.S. are mainly driven by its internal structural factors, such as low saving rates, high labor costs, and rising service sector, rather than by the import competition from China. Moreover, the trade war further deteriorates the U.S. current account deficits and erode its comparative advantage, and it forces China to invest more in technological innovation and human capital, and thus promote its progress in high-tech industries. Thus, the U.S. will not be able to achieve its strategical goals and eventually lose the trade war.     

Methodological Advances in DEA: A survey and an application for the Dutch electricity sector

We survey the methodological advances in DEA over the last 25 years and discuss the necessary conditions for a sound empirical application. We hope this survey will contribute to the further dissemination of DEA, the knowledge of its relative strengths and weaknesses, and the tools currently available for exploiting its full potential. Our main points are illustrated by the case of the DEA study used by the regulatory office of the Dutch electricity sector (Dienst Toezicht Elektriciteitswet; Dte) for setting price caps.     

Market Failures in Real-Time Metering

Policies to promote real-time metering (RTM) require more than showing benefits from more timely responses to variations in cost. They require positive externalities to imply that too few meters would be installed through private transactions. RTM presents no systematic externalities when utilities must serve peak period users, and may present negative externalities under some conditions. Positive externalities are likely when electricity is rationed through blackouts. RTM may or may not increase welfare when peak period wholesale markets are not competitive; a prohibition on RTM might be appropriate in such situations even if metering itself were costless.     

Environmental standards as barriers to trade

This paper examines the case of a good, polluting in consumption, whose pollutive content is restricted by a government with strong environmental policies. When foreign producers are unable to comply with the restrictive environmental standard of such a country, to which they wish to export, they often allege that those standards constitute illegal barriers to free trade. An example of such a good is gasoline, excessively pollutive formulations of which are prohibited from importation into the United States by the 1970 Clean Air Act. Rather than banning them, such imports should be taxed, along with the domestically produced substitute good, according to their respective pollutant contents. This would foster economic efficiency and should be more acceptable to foreign producers than the outright prohibition mandated by the Clean Air Act. The results of this paper reaffirm the argument in a previous article in this journal (Socio-Economic Planning Sciences 29 (1995) 187), though the countries’ roles in the two papers are reversed, that free trade and Pigouvian environmental policies increase international welfare.     

关税升级与中国汽车产业发展——基于空间经济学的经验研究

本文利用中国与主要汽车生产国的汽车产业有关数据，在一个关税升级体系下垄断竞争产业发展模型的基础上，运用校准法进行了初步的经验研究。与以往汽车产业贸易政策基于寡占市场结构的经验研究不同，本文试图在垄断竞争市场结构下考察关税升级对中国汽车产业发展趋势的影响。研究表明，集合主要汽车生产国的数据后，汽车产业具有集聚发展的倾向，而我国目前较高程度的关税升级体系在其他条件不变的情况下，能够降低汽车产业实现大发展的临界条件。     

入世后中国汽车工业安全度的DEA模型估算

汽车工业长期以来是我国重点实行保护政策的产业,因而也是入世后受冲击最大的产业之一。但是这种冲击到底有多大,以及在入世后的各个年份中,这种冲击又是如何分布的?尽管有不少学者已做了一些定性分析,但是定量估算的研究则少之又少。本文首先对入世后的汽车工业发展环境进行了分析,然后对入世后汽车工业发展的关键指标数据进行了预测,最后应用DEA模型对入世后汽车工业安全度进行了估算,得出了有说服力的估算结果。     

Regulating an Externality-Generating Utility Environmental Taxes Under Limited Information

Global warming is currently an important item on most nationalenvironmental agendas. In many countries, coal-fired electricity generatingstations represent an important source of greenhouse gases. We examinehow regulations to curb emissions affect public utility pricing regulationwhen regulators act non-cooperatively. We show that, when there is limitedinformation on fixed abatement costs, an environmental regulator prefersan emission tax over an output tax or a lump sum environmental tax. Thepublic utility regulator prefers the lump sum tax regime.     

Economic liberalization and welfare in a model with an informal sector

The paper reexamines the conventional results relating to inflow of foreign capital, removal of protectionism and structural reform programmes, in a small open economy in terms of a two-sector general equilibrium model with an informal sector. The paper shows that in the presence of labour market distortion and a protectionist policy, inflow of foreign capital may be desirable irrespective of the pattern of trade of the economy due to its favourable impact on welfare. But the welfare implications of tariff reductions and/or structural adjustment programmes, such as deregulating the formal sector labour market, depend crucially on the economy's trade pattern. The paper provides an answer to the question as to whether in a developing economy labour market reform and tariff reform should go hand-in-hand or whether one should precede the other for welfare improvement.
JEL classification: F10, F13, F21, O17.     

Welfare reducing licensing

In this paper, we characterize situations where licensing a cost reducing innovation to a rival firm using two-part tariff contracts (a fixed fee plus a linear per unit of output royalty) reduces social welfare. We show that it occurs if (i) the firms compete in prices, (ii) the innovation is large enough but not drastic, and (iii) the goods are close enough substitutes. Moreover, we show that, regardless of the type of competition, first, the optimal contract always includes a positive royalty and, second, even drastic innovations are licensed whenever the goods are not homogeneous.     

Does Increased Extraction of Natural Gas Reduce Carbon Emissions?

Without an international climate agreement, extraction of more natural gas could reduce emissions of CO₂ as more clean natural gas may drive out dirty coal and oil. Using a computable equilibrium model for the Western European electricity and natural gas markets, we examine whether increased extraction of natural gas in Norway reduces global emissions of CO₂. We find that both in the short run and in the long run total emissions are reduced if the additional quantity of natural gas is used in gas power production in Norway. If instead the additional quantity is exported directly, total emissions increase both in the short run and in the long run. However, if modest CO₂-taxes are imposed, increased extraction of natural gas will reduce CO₂ emissions also when the additional natural gas is exported directed.earlier version of this paper was presented at the 25th Annual IAEE International Conference in Aberdeen June 2002.