...ISSN 1471-0498 DEPARTMENT OF ECONOMICS DISCUSSION PAPER SERIES OLIGOPOLY AND TRADE Dermot Leahy and J. Peter Neary Number 517 December 2010 Manor Road Building, Oxford OX1 3UQ OLIGOPOLY AND TRADE Dermot Leahyy National University of Ireland, Maynooth J. Peter Nearyz University of Oxford and CEPR December 13, 2010 Abstract In this chapter we present a selective analytic survey of some of the main results of trade under oligopoly. We concentrate on three topics: oligopoly as an independent determinant of trade, as illustrated by the reciprocal-markets model of Brander (1981); oligopoly as an independent rationale for government intervention, as illustrated by strategic trade and industrial policy in the third-market model of Spencer and Brander (1983); and the challenges and potential of embedding trade under oligopoly in general equilibrium as illustrated by the GOLE model of Neary (2002). Keywords: GOLE (General Oligopolistic Equilibrium); reciprocal dumping; strategic trade policy. JEL Classi…cation: F12, L13 Prepared for the Palgrave Handbook of International Trade, edited by Daniel Bernhofen, Rod Falvey, David Greenaway and Udo Kreickemeier. We are grateful to Daniel Bernhofen, Monika Mrázová and Tony Venables for helpful discussions. Dermot Leahy acknowledges the support of the Science Foundation Ireland Research Frontiers Programme (Grant MAT 017). y Department of Economics, National University of Ireland, Maynooth, Maynooth, Co. Kildare, Ireland;...
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...information: Born in Padova (Italy) on 1st July 1964 Italian citizen Addresses: Home: Via Trieste 22, 24045 Fara Gera d’Adda (BG) Italy. Ph. +39 0363 399221 Work: Dipartimento di Ingegneria Gestionale - Politecnico di Milano Piazza Leonardo da Vinci 32, 20133 Milano, Italy Ph. + 39 02 2399 2752, Fax +39 02 2399 2710, e-mail: lucia.tajoli@polimi.it Academic positions: • Associate Professor of Economics at Politecnico di Milano (Italy) since November 2001. • Visiting professor at the Ford School of Public Policy, University of Michigan (USA) in 2003 and 2007. • Assistant Professor of Economics at Politecnico di Milano (Italy) from May 1996 to October 2001. • Lecturer at Università Bocconi from November 1993 to April 1996. Other current positions: Senior research fellow at the Istituto di Studi di Politica Internazionale (ISPI), Milano, Italy. Consultant to the Italian National Institute for Foreign Trade (ICE), Roma, Italy. Affiliate researcher at KiTES - Università Bocconi, Milano, Italy. Education: Ph.D. in Economics, Bocconi University (Milan, Italy), 1994. Certificate of Advanced Studies in International Economic Policy Research, Institute of World Economics (Kiel, Germany), 1991. Bachelor Degree in Economics at Bocconi University (Milan,Italy), 1988. Research interests and recent research projects’ topics: International trade networks; Patterns of international specialization; Economic integration between countries; European enlargement process; Economic growth and openness; Trade policy...
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...information 2. When disposable income (DI) is zero, ______ . A. autonomous consumption is equal to induced consumption B. autonomous consumption is equal to total consumption C. induced consumption is equal to total consumption D. autonomous consumption is zero E. induced consumption is greater than zero 3. The minimum amount that people will spend even if DI is zero is called _____ consumption. A. autonomous B. permanent C. induced D. total E. special 4. According to the permanent income hypothesis, if a person won the lottery, they would spend _____ that year. A. all of the winnings B. some of the winnings C. none of the winnings D. more than all of the winnings 5. The permanent income hypothesis is a theory from economist _____ . A. Adam Smith B. John Maynard Keynes C. Thorstein Veblen D. Milton Friedman E. Karl Marx 6. Conspicuous consumption is a theory from economist _____ . A. Adam Smith B. John Maynard Keynes C. Thorstein Veblen D. Milton Friedman E. Karl Marx 7. In the U.S., the largest component of C is ______ . A. durable goods B. services C. nondurable goods D. inventory E. residential housing 8. The consumption function tells us that, as income rises, consumption _____ . A. declines B. remains the same C. rises but more slowly than disposable income D rises but more quickly than disposable income 9. When DI levels are very low (close to zero), C is _____ . A. zero B. higher than DI C. lower than DI D. equal to DI 10. When DI = C, savings is _____ . A. positive B...
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...1. Di Bella Coffee’s Company Di Bella Coffee was established in Brisbane in 2002 and has become one of the largest coffee specialists in Australia and channels to market. Di Bella Coffee have distributed their product to China, India, and New Zealand markets in recent years (Australian Food News, 2014). Di Bella Coffee developed a new category of coffee called Espresso Martini. They have now tailored their coffee products to be sold through internet. Further, digitalisation within Di Bella Coffee is being used to support the international aspirations of the company through the recent development of an online store that sells products such as Espresso Martini direct to wholesalers and consumers worldwide ( Fletcher and Crawford, 2014). Espresso Martini is made from freshly brewed A Grade coffee beans sourced via their Crop to Cup programme and premium vodka. This Espresso Martini is sold in Australia as a 4 pack - $19.95. On the other hand, Di Bella Coffee have to compete with other competitors. There are other coffee suppliers and retailers in Australia, for instance, Merlo, Mokador, Zaraffas, Gloria Jeans, and Campos Coffee. Also, international coffee retailers and franchises like Starbucks. Di Bella Coffee is directly related to farmers, which is dedicated to supporting sustainable agricultural practices.In addition, the company continues to expand various store formats, including stores Drive Thru, to provide a level of access and convenience for customers...
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...When Manufacturing Moves Back: Concepts and Questions Luciano Fratocchi1, Carmela Di Mauro2, Paolo Barbieri3, Guido Nassimbeni4, Andrea Zanoni5 1 Department of Industrial & Information Engineering & Economics, University of L’Aquila Via G. Gronchi 18, Nucleo Industriale Pile, L’AQUILA AQ ITALY luciano.fratocchi@univaq.it +39-0862-434356 CORRESPONDING AUTHOR 2 Department of Civil and Environmental Engineering, University of Catania Via A. Doria 5, 95131 CATANIA CT ITALY cdimauro@unict.it 3 Department of Management, University of Bologna Via U. Terracini 28, 40131 BOLOGNA BO ITALY p.barbieri@unibo.it 4 Department of Electric, Managerial and Mechanical Engineering, Via Delle Scienze, 206, 33100 UDINE UD ITALY nassimbeni@uniud.it 5 Department of Management, University of Bologna Via U. Terracini 28, 40131 BOLOGNA BO ITALY andrea.zanoni@unibo.it ABSTRACT Interest in back-reshoring strategies – intended as companies’ decisions to reverse previous off-shoring by bringing manufacturing back home – has gained momentum recently. However, little is known so far about the magnitude of this phenomenon, about its geographical boundaries, and about the underlying motivations. In this paper a characterization of back-shoring as part of the dynamics of firms’ internationalization strategies is offered. Next, building on emerging empirical evidence, open questions are identified and an agenda for research is proposed. KEYWORDS Reshoring Back-reshoring Near-reshoring Off-shoring Internationalization...
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...kalagayan o kondisyon ng Pilipinas bago manakop ang espanyol sa Pilipinas? The Indolence of Filipinos: “Before the arrival of the Europeans, the Malayan Filipinos carried on an active trade, not only among themselves but also with all the neighboring countries. A Chinese manuscript of the 13th century, translated by Dr. Hirth (Globus, Sept. 1889), which we will take up at another time, speaks of China's relations with the islands, relations purely commercial, in which mention is made of the activity and honesty of the traders of Luzon, who took the Chinese products and distributed them throughout all the islands, traveling for nine months, and then returned to pay religiously even for the merchandise that the Chinamen did not remember to have given them. The products which they in exchange exported from the islands were crude wax, cotton, pearls, tortoise-shell, betel-nuts, dry-goods, etc.” "They conducted him to their boats where they had their merchandise, which consisted of cloves, cinnamon, pepper, nutmegs, mace, gold and other things; and they made us understand by gestures that such articles were to be found in the islands to which we were going." “That the islands maintained relations with neighboring countries and even with distant ones is proven by the ships from Siam, laden with gold and slaves, that Magellan found in Cebu.” “Accordingly, the Filipinos, in spite of the climate, in spite of their few needs (they were less then than now), were not the indolent ...
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...At a time when lide has rerely benn tougher for manufacturers in the developed world, miele’s strategy for survival is to break almost all the rules. The german company, a global leader in high-quality domestic appliances such as washing machines and vacum cleaners, is renowned for its exavting manufacturing standards and its refusal to move down-market and compete on price. Miele bases nearly all its manufacturing in high-cost Germany and is self-sufficient to a high degree. Rather than outsource to low-cost supliers, it makes 4m electric motors ayear (enough for all its products) in its own plant near cologne. Which it says is essential to maintain its quality standards. Sales last year werw E2.2bn (L1.5bn) The approach commands respect among miele,s industry peers. ‘it is the Rolls-Royece of the industry, with a fantastic position at the top end,’ says Andrea Guerra, chief executive of Merloni, the italian white goods maker. But the domestiic appliance sector is one of europe’s most competitive and inevitably questions are being asked about how long miele can stick to what many see as its old-dashioned ways, before succumbing to lower-costt rivals. In fact, whether miele survives in its current form over the next decade will be an important test case for the whole of european manufacturing. The company sells appliances ranging from dishwashers to coffee machines, most commanding a price premium of up to 70 per cent over the competitors’ wares. It spends 12 per cent of its...
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...Environmental regulations - Corruption - Moral obligation of multinational corporations Employment Practices • Ethical issues associated with employment practices abroad include - When work conditions in a host nation are clearly inferior to those in a multinational’s home nation, what standards should be applied? - While few would suggest that pay and work conditions should be the same across nations, how much divergence is acceptable? Human Rights • Questions of human rights can arise in international business because basic human rights still are not respected in many nations - Rights that we take for granted in developed nations, such as freedom of association, freedom of speech, freedom of assembly, freedom of movement, and freedom from political repression are by no means universally accepted • The question that must be asked of firms operating internationally is: ‘What is the responsibility of a foreign multinational when operating in a country where basic human rights are trampled on?’ Environmental Pollution • Ethical issues arise when environmental regulations in host nations are far inferior to those in the home nation -...
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...Asymmetric Information, Portfolio Managers, and Home Bias Wioletta Dziuda Jordi Mondria Kellogg School of Management UNC Chapel Hill February 2012 First version: February 2009 Abstract We propose a model of delegated asset management that can explain the following empirical regularities observed in international markets: (i) the presence of home bias, (ii) the lower proportion of mutual funds investing domestically, and (iii) the higher ability and market value of mutual funds investing domestically. In the model, heterogeneous fund managers choose whether to specialize in domestic or foreign assets. Individual investors are uncertain about managers’abilities to generate abnormal returns, and they are more informed about domestic markets than foreign markets. As a result, they are better able to evaluate the ability of managers who specialize in domestic assets. This makes domestic investments less risky and generates home bias. Home bias is magni…ed by the managers’specializations: since ability is rewarded more in the domestic market, higher ability managers invest domestically, making domestic assets more attractive to the investors. Wioletta Dziuda, Kellogg School of Management, Northwestern University, email: wdziuda@kellogg.northwestern.edu; Jordi Mondria, Department of Economics, University of North Carolina at Chapel Hill, email: mondria@email.unc.edu. We are grateful to Philippe Bacchetta, Markus Brunnermeier, Matthew Doyle, Juan Carlos...
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...with it. What makes Starbucks unique from its competitors and how does its marketing strategy tick? Background It all started when Gerald Baldwin, Gordon Bowker, and Ziev Siegl opened its first Seattle coffee shop in 1971. Since then, Starbucks Coffee Company established itself as the leader in the coffee industry with continuous market growth and expansion. With 17, 003 stores in 58 countries, the company’s main objective is to establish Starbucks as the “most recognized and respected brand in the world.” (Starbucks, 2011) Currently, Starbucks is relying on retail expansion, product innovation, and service innovation to achieve a long-term goal once set by current chairman Howard Schultz: “The idea was to create a chain of coffeehouses that would become America’s “third place.” At the time, most Americans had two places in their lives – home and work. But I believed that people needed another place, a place where they could go to relax and enjoy others, or just be by themselves. I envisioned a place that would be separate from home or work, a place that would mean different things to different people,” (Moon, 2011). By working toward this goal, Starbucks wants to open new stores in both new and existing markets, expand their product development process, and cater to customers’ needs to eventually improve their financial position and dominate market share. Marketing Strategy Target Market Starbucks is mainly adult-focused...
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...Chapter 01 - Why Are Financial Institutions Special? Chapter One Why Are Financial Institutions Special? True/False 1-1 Prior to the financial crisis of 2007-2008, J.P. Morgan Chase was the largest bank holding company in the world and operations in 60 countries. Answer: F 1-2 As of 2009, U.S. FIs held assets totaling over $35 trillion Answer: T 1-3 Financial institutions act as intermediaries between suppliers and demanders of money. Answer: T 1-4 If a household invests in corporate securities and does not supervise how the funds are invested or used by the corporation, the risk of not earning the desired return or not having the funds returned increase. Answer: T 1-5 If not done by FIs, the process of monitoring the actions of borrowers would reduce the attractiveness and increase the risk of investing in corporate debt and equity by individuals. Answer: T 1-6 Failure to monitor the actions of firms in a timely and complete fashion after purchasing securities in that firm exposes the investor to agency costs. Answer: T 1-7 The risk that the sale price of an asset will be less than the purchase price of an asset is called liquidity risk. Answer: F 1-8 Because bank loans have a shorter maturity than most debt contracts, FIs typically exercise less monitoring power and control over the borrower. Answer: F 1-9 FIs typically provide secondary claims to household savers that have inferior liquidity than primary securities of corporations such as equity and bonds. Answer: F 1-10...
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...• Weekly quizzes via the course website Lecture 1 ECON001 7 Two Main Sections • Mi Microeconomics i • Household and firm behaviour •Taught in weeks 1-5 T h i k 15 • Mid-term exams in week Mid term 7 will be based on Microeconomics topics • Macroeconomics • Aggregate economy and business cycles • Taught in weeks 9-13 • Final exams in week 15 will be based on Macroeconomics topics Lecture 1 ECON001 8 Assessment • Class Participation (10%) p ( ) • Peer evaluation • Self evaluation • Weekly quizzes kl i • Merit and demerit marks • Group Project (10%) p j ( ) • Please select your topic via the course webpage • 20 minutes presentation • Written report • Mid-term exams (40%) • On Micro topics taught weeks 1-5 • Section A: quizzes • Section B: problem solving • Final exams (40%) • On Macro topics taught weeks 9-13 • Section A: quizzes • Section B: problem solving Lecture 1 ECON001 9 What is Economics? • The Economic Problem • Th Need f Ab The N d for Abstraction i • What is Microeconomics? • What is Macroeconomics? Lecture 1 ECON001 10 The Economic Problem • People have unlimited wants • I want a house, a car, food, clothing, movies etc. • However, we have a limited amount of resources at our disposal p • e.g. land is limited: shall we use a given plot of land to build b ild more flats or more offices? • Because of scarcity of resources, we have to make choices • Tradeoffs: more of one thing means less of another ...
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...Chapter 1: Introduction True/False 1. Primary markets are markets where users of funds raise cash by selling securities to funds suppliers. Answer: True Level: Easy 2. Secondary markets are markets used by corporations to raise cash by issuing securities for a short time period. Answer: False Level: Easy 3. In a private placement the issuer typically sells the entire issue to one or only a few institutional buyers. Answer: True Level: Easy 4. The NYSE is an example of a secondary market. Answer: True Level: Easy 5. Privately placed securities are usually sold to one or more investment bankers and then resold to the general public. Answer: False Level: Easy 6. Money markets are the markets for securities with an original maturity of 1 year or less. Answer: True Level: Easy 7. Eurodollar bonds are dollar denominated bonds issued outside the United States. Answer: True Level: Easy 8. Financial intermediaries such as banks typically have assets that are riskier than their liabilities. Answer: True Level: Easy 9. Spinning is the process of allocating shares in a ‘hot’ IPO to certain favored clients of investment banking firms in exchange for receiving additional investment banking business. Answer: True Level: Easy 10. Many stock research analysts of investment banking firms have been accused of issuing overly optimistic stock research reports on firms in order to help support the investment...
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...Healey, Eric Government 2305 Drug Testing The idea of drug testing for recipients of Public Assistance is a very controversial topic. I will discuss both the advantages and dis advantages of drug testing and how it affects the people of the United States as a whole. I believe in a system that provides for the welfare of others, food, clothing, and shelter for those that are in need, especially when children are concerned. As Americans it is important that we take care of our own citizens and help provide for them, but at what cost? Most Americans realize there is waste, fraud and abuse in almost every Government program and that includes the public assistance program. It is hoped that the use of drug testing for the receipt of Public Assistance will deter the use of drugs and weed out those that are using drugs from the system saving the taxpayer money. There is no question that there are many that have no problem staying at home and living off the sweat of another person’s labor. In many cases the recipients of Public Assistance use their money to purchase steak, lobster and many other expensive food items someone working a 9-5 job can never afford. It is believed by many that it is not fair to the tax payer to provide financial assistance to a recipient that will use that assistance to purchase drugs. Especially when those providing the assistance, i.e. the hard working tax payer, must, in most cases, undergo a drug test in order to continue to work at their...
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...(Shang) Today, Zheng Zhou is the provincial capital of the Henan Province and is a fast growing city that is one of the centers of technology and politics in China. Lying on the southern bank of the Yellow River (Huang He) Zheng Zhou is home to many beautiful pagodas, Shaolin Temples, and amazing sceneries. Though a bustling megacity today, Zheng Zhou has been an integral part of since the Shang Dynasty of China starting in 1600 BCE. During the Bronze Age, the huge country we call China today had hardly developed. At the time, people understood very little so the base of Chinese culture known as Di (or god) was created. Di gave the Shang people a sense of predictability and understanding of the world. For example, they used Di to predict whether a harvest was to be good or bad. The Shang people communicated with Di through Oracle Bones and Pyromancy. Ritual specialists would use fire to strike a special oracle bone. The grains in the bone would crack in a certain direction and the Shang people would take that as a sign their ancestors, who could better communicate with Di. The Shang people believed that they were unable to contact Di directly. However, as ancestors were more forgotten by the living people, they got closer to Di. In this way, ancestor worship became an integral part of Shang Dynasty culture. Sacrifices of animals and food were regularly practiced to please those who have died so they...
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