16 research outputs found
Metzler paradox and home market effects in presence of internationally mobile capital and non-traded goods
Full text linkIn models of monopolistic competition with a single factor of production, imposition of tariff can lead (paradoxically) to a drop in the aggregate price index of the import competing sector. The present model first introduces an internationally mobile capital in such a set up. It is found that tariff attracts a capital inflow into the protected sector, which results in a reduction the price index. Interestingly, the tariff protected importing sector expands, although the domestic price index falls. However if there is a homogeneous non-traded good, along with the mobile capital, effect on the price index of the import competing sector becomes ambiguous. Further, the number of varieties produced by the import competing sector can actually fall and the import competing sector may actually contract
Tariffs that may fail to protect: A model of trade and public goods
Full text linkThis paper develops a model of small open economy, with a differentiated goods sector and voluntary provisioning of public good. It is shown that trade policy can alter the quantity of public good provided in the equilibrium. Interestingly, tariffs may fail to protect, leading to a Metzler Paradox like situation. This is because the income effect generated due to the imposition of tariff can lead to an increase in the contribution to the public good. An expanding public sector crowds out the import competing sector. This result holds unambiguously in the neighbourhood of free trade
Essays on International Economics in Presence of Economics of Scale and Monopolistic Competition.
No full textTrade theorists, have generally been concerned with three basic questions: Why do countries engage in trade? What is the pattern of trade? and What are the gains from trade? These questions have remained the focal point of inquiry from the times of Adam Smith till the present day. The first two questions inquire, respectively about the causes of trade, and if trade indeed takes place, then about the pattern of specialization of each country in the post trade situation. These are thus questions of positive economics. The third point of inquiry is normative. This is because, gains and losses from trade are generally associated with redistribution of income among the various constituent groups of a nation. David Ricardo explained that countries trade because of comparative advantage. Each nation produces the good that it can produce at a lower relative cost. Comparative advantage refers to the ability of a nation, to produce a particular good or service at a lower relative marginal cost over another (nation). Thus as trade opens up, each nation concentrates its resources for production of the good in which it enjoys comparative advantage. This in turn implies that across the nations consumers can avail the goods produced, at the least prices (these models assume markets to be perfectlycompetitive and prices are equated to marginal costs). Thus, classical competitive trade theory sought to explain the pattern of trade with models based on some underlying difference among the nations. In standard Ricardian models, a single factor of production is assumed, and it is the difference of technology, that causes trade. Another standard source of explanation of the phenomenon of international trade is the Heckscher-Ohlin model. Developed by Eli Heckscher and Bertil Ohlin, this model also explains trade via comparative advantage, though positing a different source for it. The source of comparative advantage in this genre of models is the difference in relative factor endowments, and it is predicted that each country would export a good which was intensive in usage of the factor that was relatively abundant in the country. In recent years, another distinct class of models have emerged that explains the phenomenon of international trade invoking the idea, that trade enables more specialized usage of resources which brings efficiency gains to all the trading countries involved, even though they may be similar in terms of their comparative advantage. This idea actually has its origin in the writings of Adam Smith. Adam Smith explained that in all market exchanges, humans have propensity to truck, barter and exchange one thing for other (Wealth of Nations I, ii, 1). Interestingly, he also pointed out that exchange brings about gains from specialization by enhancing the division of labour. He illustrated this point with his famous pin factory example, which showed that the division of labour produces an increase of the quantity of work which the same number of people are capable of performing (Wealth of Nations, I.i.5). This Smithian argument has been employed in trade models, that seek to explain international trade among similar nations
Indirect taxes in oligopoly in presence of licensing opportunities
Full text linkThis paper considers the relative efficiency of unit tax and ad valorem tax in Cournot doupoly in the presence of licensing opportunities after the announcement of the tax rates by the government. Anderson et al. (2001) shows that in such a case ad valorem tax welfare dominates the unit tax. However, it ignores the licensing possibilities. Interestingly, it is shown in the present paper that in case of fixed-fee licensing unit tax sometimes dominates ad valorem tax. However, unit tax and ad valorem tax are equally efficient in case of royalty licensing
Is Nepotism Inevitable Under Search and Matching Friction?
Full text linkThe present article develops a search and matching framework to model political nepotism in the job market. The model argues that labor market friction generates incentives for the political leaders to provide nepotism under a democratic set up. Both the leaders optimally choose nepotism when the labor market friction is higher. It is shown that even for a relatively lesser labor market friction at least one leader would always choose nepotism. The results of the basic model remain robust in an extension where followers can pay a price and choose their allegiance, to any one of the political parties
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Integration of Renewable Distributed Energy Resources into Microgrids
Full text linkAlthough the existing traditional power grid can maintain an instantaneous balance between supply and demand, it is constantly facing many problems such as energy crisis, environmental pollution and instable centralized control mode. Regarding to these problems, pioneers have been making efforts in developing microgrid. One key driver of establishing the need of microgrid in research of smart grid is the renewable distributed energy resources. However, it is still challenging to properly integrate them. Primary limitations on renewable distributed energy resources include: intermittency and uncertainty, size and site-dependent, as well as information exchange standardization. In the thesis, author proposes several solutions to address the above-mentioned problems. It includes the study on current status of integration of renewable distributed energy sources into microgrids, the mathematical modeling of each renewable resource such as solar PV panel and wind turbine with energy storage management, the development of forecasting methods by auto-regressive moving average model and persistence method, the design and solution of the optimal sizing and placement of renewable distributed energy by genetic algorithm and nonlinear programming, as well as integration of IEC 61850 into the communication network of the microgrid as a standardization of information exchange. The approaches are performed and validated on three microgrid test beds, to support the fact that renewable distributed energy generation can be gradually and properly integrated into the power grid
