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Author: Silja Maren Baller
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Category :
Languages : en
Pages :
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Author: Silja Maren Baller
Publisher:
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Category :
Languages : en
Pages :
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Author: Silja Baller
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Category : Industrial organization
Languages : en
Pages : 0
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Author: Fayçal Régis Sinaceur
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Category : Competition, International
Languages : en
Pages : 0
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This Thesis presents three essays in the area of strategic trade theory and policy. The first essay presents an analysis of trade and welfare between countries with asymmetric conditions. A two-period two-country address model of product differentiation is examined in which firms face an initial period of autarky. Trade takes place in the subsequent period and firms fully anticipate switches in trade regimes. Results suggest that historical (domestic) conditions matter a lot on the international market place. Firms that come from countries with a larger market tend to develop longer product lines, which puts that country in a dominant position in international competition. The model is also used to analyse gains/losses from trade in relation to country size. The second essay investigates the differential effects of specific and ad-valorem tariffs on quality, price and welfare in an oligopolistic industry consisting of foreign and domestic firms. These effects are shown to depend on the location of the home and foreign firms in the quality spectrum. Both tariffs are ranked and conditions for either tariff to be welfare superior are derived. Finally, the third essay presents an analysis of trade policy with endogenous market structure. A "third market model" is specified. Using a simple framework in which industry structure is derived endogenously as the outcome of product line decisions by firms, we show that governments have an incentive to affect the equilibrium product composition by setting non-zero subsidy rates in order to maximize domestic welfare. Subsidies may be uniform or non-uniform across goods and the optimal policy exhibits strong discontinuities as domestic welfare maximization implies a switch of regimes.
Author: Mian Muhammad Farrukh Raza
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Category :
Languages : en
Pages :
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Leaders around the world have introduced various trade policies including subsidies, tariffs, anti-dumping duties or price undertakings throughout the trade history. These trade policies have benefitted states in different ways. For example, some countries achieved economic development by supporting their firms through various subsidies and helping them to enhance their product qualities and become competitive in the international market. Whereas, in other cases leaders engage in imposing tariffs - a policy helps leaders to protect their producers and generate revenue. Such trade policies are not only limited to the benefits; however, they may incur costs too. As such, the imposition of trade policies affects the social welfare of all parties engaged in trade. Recently, we have seen that US-China engaged in a trade war where the United States has imposed tariff duties against China, and China responded with its tariffs on US products. This trade war has affected the social welfare one way or another. Such trade practices in the past have led scholars to address questions related to trade policies. Despite the work on trade policies, there is still a wide variety of questions yet to be answered regarding trade policies. This dissertation address three important questions related to international trade policies and their impact on social welfare. The first chapter is motivated by the observation of the quality difference between imported and local products in Pakistan. This chapter addresses the question of whether import-competing markets where foreign products are of high quality, are domestic firms doomed to produce low-quality products? What are policy options available to an importing country government that has the multiple objectives of maximizing consumer surplus, domestic profit and welfare, besides generating product quality reversal? Using a duopoly framework of vertical product differentiation, we analyze and compare three policy options: an import tariff, free trade, and a quality-upgrading R&D subsidy. We identify the conditions under which the quality-based R&D subsidy policy is a win-win-win strategy in that consumer surplus, domestic profit, and social welfare are all at their maximum levels, in addition to product quality reversal. The second chapter is motivated by the contemporary US-China trade war and its welfare implications. This paper analyzes differences in welfare implications between import tariffs and antidumping (AD) duties within a unified model of trade in quality-differentiated products under international duopoly. Specifically, the model allows for product quality choices by two competing firms located separately in a developed country (DC) and a less-developed country (LDC), where there is a different degree of international market competition. We show that dumping arises as an LDC firm sells a low-quality product that is "dumped" into the DC market. Compared to import tariffs, imposing AD duties (based on the dumping margin) by the DC government makes its firm better off. Whether DC consumers are better off and whether there is welfare improvement for DC are shown to depend on the degree of market competition. We further identify conditions under which a tariff policy is preferred over an AD policy (or the other way around) from the world perspective of welfare. The third paper investigates which types of firms (DC or LDC) tend to practice dumping, using a two-market equilibrium model of trade in "like" products with quality differentiation. Specifically, within the framework of duopolistic competition between a DC firm and an LDC firm, we show that the DC firm sells a high-quality product without practicing dumping. In contrast, the LDC firm sells a low-quality product that is dumped into the DC market at a price less than the price of the product in its LDC market. The imposition of antidumping duties by the DC government increases domestic welfare. It is welfare increasing to LDC when its exporting firm accepts a price-undertaking, rather than practicing dumping. From the perspective of world welfare, defined by aggregating the welfare of DC and LDC as trading partners, the trade damage measure of an antidumping policy is Pareto superior to free trade (under which dumping takes place) and price-undertakings.
Author: Chi-Hung Liao
Publisher:
ISBN: 9781321211993
Category :
Languages : en
Pages :
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Product quality plays an important role in determining international trade flows. Its level is related to product unit value, characteristics of importing countries, and many other key variables in trade. In this dissertation, we study product quality and its role in various trade topics. In the first chapter, we study its role in price markup and how it is related to the importing countries' income. In the second chapter, we study multi-product firm's decision on exporting the top and the bottom qualities and the range of quality ladder facing different destination markets. In the last chapter, we study how a firm's offshoring decision is related to the quality of final product, the probabilities of making mistakes, the wage difference, and the size of the economy. We will describe each chapter in detail in the following paragraphs. We believe this dissertation complements current literature on product quality and tradein the areas of price markeup, multi-product firm behavior, and offshoring decision. In the first chapter, we begin by documenting the price discrimination practice based on destinations' per-capita income levels from the automobile industry. It is found that low-quality model manufacturers practice price discrimination while high-quality model manufacturers set price more uniformly across destinations. A highly tractable model was developed to capture these different practices of pricing strategies by including the distribution cost in the firm's decision. Each firm in the model simultaneously chooses quality and price to maximize its profits. The model predicts that highly productive firms not only produce higher quality products, but also price their products more uniformly across destinations. An extension of the model that features consumer income inequality predicts that products are sold at higher prices in countries with high income inequality. This result reconciles observations of high prices found in some developing countries such as China. Empirical results support the model's two key predictions: firms with higher productivity price their products more uniformly; and countries' income inequalities affect price positively.The second chapter is motivated by the stylized fact that not all vertically differentiated car models are sold sold in each country. Furthermore, the number of car models sold in each country appear to be systematically affected by destination market's conditions. To study this stylized fact of multi-product firm's decision on quality products, we use a model where firms simultaneously determine optimal prices and the range of quality products. It is found that the top and bottom qualities and the length of the quality ladder are affected systematically by various firm's and market's conditions. The empirical results using European car data from 1993-2011 supports the key predictions in the model.In the last chapter, we are interested in studying firm's offshoring decision and how it is related to product quality. In recent years, the highly intensified and diversified global offshoring activities have been accompanied by some onshoring activities led by large U.S. manufacturing companies. To address this stylized fact, we started with a value-chain offshoring model with product quality specification. Besides the wage difference between countries, the model assumes that each country has a probability of making mistakes. It is found that the range of tasks processed in offshoring destination is related to the probabilities of making mistakes, the wages, and the size of the economies. Increasing the quality of final product, however, does not change the range of products being offshored which implies an onshoring activity. Following the theoretical model, we use the trade data in China from 1998-2013 in the empirical model and confirm the key predictions in the theoretical model. This chapter contributes to current offshoring literature by addressing the product quality specification, the onshoring activities, and identifying the effect of making fewer mistakes on the range of products offshored.
Author: Yingyan Zhao
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Category :
Languages : en
Pages :
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My studies focus on the welfare implications of market frictions and policy distortions. This dissertation includes three chapters on international trade and development economics. Based on empirical evidence found in data, I build and estimate theoretical models which can be used further to quantify policy implications. My research includes both positive and normative analysis.In Chapter 1, I study how information asymmetry affects trade and what is the policy implication. The problems of moral hazard and adverse selection can seriously impede the development of export markets for firms from less developed countries. Importing firms have little recourse in developing country courts should their suppliers provide sub-quality goods, and they face great difficulty in distinguishing good firms from bad ones. My paper is the first to develop and estimate a dynamic structural model that incorporates both features of asymmetric information, namely moral hazard and adverse selection. In the model, the information asymmetry is high for new entrants but then gradually fades as idiosyncratic fixed cost shocks drive inefficient firms from the market. Thus, a firm's tenure in export markets is a signal of its efficiency, and consequently the price that it can obtain rises with tenure. Market-wide shocks to fixed costs, as occur when product safety regulations are imposed, flatten the price-tenure gradient as they disproportionately induce inefficient firms to exit. Using a triple-difference strategy, I show that these predictions hold in firm-level Chinese export data. This variation in the data also allows me to estimate my model and use it for counterfactual analysis. I show that the problem of information asymmetry is severe for Chinese entrants into export markets and that the problem is made worse by government export subsidies. Reducing these subsidies would raise aggregate export profits for Chinese firms.In Chapter 2, I study the welfare implication of location-based policies in a general equilibrium framework. Location-based policies are put in place in many countries to promote local economies. Based on Chinese Manufacturing Survey data, we see that there exist significant differences in corporate income tax rates across regions and across industries within a region. Hence, the location-based policy that we study here is the preferential corporate income tax rate that is offered by local Chinese governments to attract firms. We use a general equilibrium model, that takes into account both the creation and diversion of economic activity across space, to study the welfare implications of this policy in China. Our model is characterized by two agglomeration forces: Marshallian externalities and input-output linkages. Heterogeneous firms choose their production locations based on the above forces of agglomeration, the corporate income tax rate, wages and market access. After calibrating the model to the data, we find that this policy reduces aggregate welfare by 0.26% relative to the scenario in which corporate income taxes are equal across regions and across industries within a region. Both agglomeration forces play an important role. Preferential tax rates in underdeveloped areas attract firms away from more developed areas, thereby preventing them from exploiting the efficiency gains due to agglomeration. If agglomeration was not considered, then the welfare loss would have been underestimated by 59%.In Chapter 3, using high quality administrative data on Greece we show that class size has a hump shaped effect on achievement. We do so both nonparametrically and parametrically, while controlling for potential endogeneity and allowing for quantile effects. We then embed our estimates for this relationship in a dynamic structural model with costs of hiring and firing.We argue that the linear specification form used in past work may be why it found mixed results. Our work suggests that while discrete reductions in class size may have mixed effects, discrete increases are likely to have very negative effects while marginal changes in class size would have small negative effects.We find optimal class sizes around 27 in the absence of adjustment costs and achievement maximizing ones around 15, and firing costs much larger than hiring costs consistent with the presence of unions. Despite this, reducing firing costs actually reduces achievement. Reducing hiring costs raises achievement and reduces class size. We show that class size caps are costly, and more so for small schools, even when set at levels well above average.
Author: Makoto Okamura
Publisher:
ISBN:
Category :
Languages : en
Pages : 126
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Author: Eddy Bekkers
Publisher: Rozenberg Publishers
ISBN: 905170903X
Category :
Languages : en
Pages : 144
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The thesis is organized as follows. Chapter 2 contains a survey of the three most in‡fluential models on fi…rm heterogeneity and of the most important empirical work on firrm heterogeneity. The chapter starts with a brief review of the homogeneous productivity imperfect competition literature. Chapter 2 …finishes with a comparison of the three most in‡fluential models of fi…rm heterogeneity and the oligopoly model put forward in the thesis. Chapter 3 addresses exporting uncertainty under heterogeneous popularity. Chapter 4 contains the chapter on …firm heterogeneity under oligopoly. Chapter 5 constitutes the models on …firm heterogeneity and endogenous quality. Chapter 6 points out the within-sector specialization model. Chapter 7 addresses the effect of importer characteristics on unit values and the role of markups and quality to explain this effect. Chapter 8 concludes.
Author: Jong Hyun Chung
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Category :
Languages : en
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This thesis consists of three essays in international trade. The first chapter explores the consequences of firm-level resource misallocation on the gains from trade liberalization. While the standard trade models explain observed firm heterogeneity with variance in firms' innate productivity, discriminatory policies and political connections may also affect the firm size and generate resource misallocation across firms. In this chapter, I show that the productivity heterogeneity alone cannot adequately explain the observed firm-level patterns in Chinese manufacturing sector. I document that larger firms exhibit lower average revenue productivity, revenue productivity variance is high conditional on firm size, and larger exporters exhibit lower export intensity. Introducing firm-level misallocation can help reconcile these facts and doing so matters for estimating the gains from trade. The misallocation model predicts the size of gains from trade that is 45\% lower than the standard model predicts when both models are calibrated with the same Chinese manufacturing data. The result suggests that accounting for firm level heterogeneity in the dimensions other than productivity is important when estimating the gains from trade. The second chapter, a joint work with Antoine Berthou (Banque de France), Kalina Manova (University College London), and Charlotte Sandoz (IMF), examines the impact of international trade on aggregate welfare and productivity. We show theoretically and numerically that bilateral and unilateral export liberalizations increase aggregate welfare and productivity, while unilateral import liberalization can either raise or reduce them. However, all three trade reforms have ambiguous effects in the presence of resource misallocation across heterogeneous firms. Using unique new data on 14 European countries and 20 manufacturing industries during 1998-2011, we empirically establish that exogenous shocks to both export demand and import competition generate large aggregate productivity gains. We develop a precise mapping between theory and empirics, and provide evidence for the adjustment mechanisms. First, both trade aspects increase average firm productivity, but export expansion also reallocates activity towards more productive firms, while import penetration acts in reverse. Second, both export and import exposure raise the productivity threshold for survival, but the latter is not a summary statistic for aggregate productivity. Finally, efficient institutions, factor and product markets amplify the productivity gains from import competition, but dampen those from export expansion. We conclude that the effects of globalization operate through firm selection and reallocation in the presence of resource misallocation. The third chapter studies the role of production chain on the patterns of international trade. Theory suggests that if producing a final product requires a sequence of production stages, and a mistake occurring at any stage destroys the product, then countries with higher productivity has comparative advantage in later stages of production chain, where the cost of mistake is higher. Despite this prediction, I combine international trade data with country and sector level data to show that more developed countries specialize in earlier stages, once other sources of comparative advantage have been considered. This result suggests that quality control is potentially an important factor in country's specialization along production chains -- when mistakes are imperfectly observed, countries with better ability to observe mistakes would specialize in more upstream sectors.
Author: Kai C. T. Hielscher
Publisher:
ISBN:
Category : Consumer behavior
Languages : en
Pages : 818
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