International Journal of Economic Theory最新文献

We study the lifecycle aspect of within-country inequality that stems from capital and labor services supplied by individuals. Our environment is a combination of a multicountry trade model and an overlapping generations model with production and capital accumulation. Trade liberalization increases the measured total factor productivity in each country, which increases the marginal product of capital and incentivizes capital accumulation. Higher capital stock and higher measured productivity raise the marginal product of labor and, hence, wages. Inequality, measured by the ratio of old agents' income to young agents' income, evolves over time due to capital accumulation during the transition from autarky to an open-economy world. Immediately after liberalization, inequality increases. Over time, capital accumulates at a diminishing rate and inequality declines.

This paper investigates the welfare ramifications of international outsourcing in the presence of foreign investment initiated by outsourcing-induced interest effect. Utilizing the Heckscher-Ohlin model of general equilibrium, we show that unlike the common view that outsourcing renders negative effects on domestic employment, but positive effect on the welfare, (a) the output and employment effects of outsourcing are ultra-biased such that it always increases (decreases) those of the outsourcing (nonoutsourcing) sector; (b) the effects of outsourcing on factor-intensities and factor-prices depend on the factor intensity ranking such that outsourcing occurring in the capital-intensive (labor-intensive) sector lowers (raises) the capital-labor ratio of both the outsourcing and the nonoutsourcing sectors, lowers (raises) the real wage rate and raises (lowers) the real interest rate, and hence worsens (improves) income distribution; (c) in the presence of foreign investment, outsourcing in the capital-intensive (labor-intensive) sector may be welfare-reducing (is always welfare-increasing) due to increase (decrease) in the outsourcing-induced interest payments for the foreign capital stock. Noting that international outsourcing nowadays serves as a key driving force for production fragmentation and supply chain formation, this paper discovers an important, but previously unnoticed feature in international outsourcing, namely, the outsourcing-induced an interest rate effect on foreign capital movement.

We introduce factor specificity to reflect the cost of adjustment of reallocating factors between technologies that determine fixed costs and variable costs in a typical Dixit–Stiglitz–Krugman (DSK) model of trade, retaining all other standard specifications of such a framework. We show that such an apparently benign change fundamentally alters the results of the DSK model. The number of varieties and output per variety depends entirely on full employment conditions. Thus, DSK and Heckscher–Ohlin–Samuelson (HOS) models, which represent the major workhorses of old trade theory, converge in the sense that now the number of varieties and outputs per variety are completely determined by factor endowments.

This paper examines the wage and welfare effects of the competition policy in a platform economy. An increase in downstream platform providers widens the skilled-unskilled wage gap in the short run. Moreover, competition brings about a beneficial price pass-through effect but a detrimental cost-pushing effect on upstream manufacturers. This leads to business dynamism in manufacturing firms. By numerical simulations, the number of manufacturing firms increases, thus further widening wage inequality in the long run. The optimal number of platform providers is smaller when the business-stealing effect is larger, whereas it is larger when the price pass-through effect is greater.

This paper contributes to the literature on finance, production, and Research and Development (R&D) by investigating the unique possibilities of polarized decisions of entrepreneurs to yield “extreme” points rather than an “interior solution.” Financiers provide credits for employing sector-specific skilled and unskilled workers as well as for R&D. With the objective of maximizing returns, financiers' interest lies in financing R&D only in the skilled sector while the unskilled sector—without innovation—collapses. Such corner solution occurs due to much higher skilled-augmenting technical change guaranteeing maximum prospective return than that in the unskilled. This offers a novel interpretation of a declining share of production workers.

This paper applies a generalized oligopolistic equilibrium model with labor rigidity under strategic competition between heterogeneous firms, explaining the trade between two similar countries for the declining wage and labor share, the common experiences of many countries worldwide. The specialization effect for the labor movement from a high to less labor-intensive sector arising from the heterogeneous productivity distribution of firms between trading partners dampens the wage more than the joint effect of market size and competition working favorably on it. Despite the wage drop, the trade ambiguously affects employment but unambiguously reduces their distributive share.

This paper studies the effect of factor substitution on long-run growth and the convergence speed in the one-sector endogenous-growth model. We consider a general production function that encompasses the most commonly used specifications as particular cases. For two economies with the same initial conditions and parameter values, including the baseline elasticity of substitution (EOS), the one with the higher asymptotic EOS has the higher long-run growth and convergence speed. If the asymptotic EOS is a nondecreasing function of its baseline value, an increase in the baseline EOS entails a higher long-run growth and convergence speed.

Consumer stockpiling involves the intertemporal demand substitution that allows the firm to differentiate stockpilers from others and employ varying pricing strategies. In this paper, I set up a two-period monopoly model that incorporates consumer stockpiling behavior to investigate the effect of stockpiling-based pricing. In equilibrium, I show that when the level of heterogeneity among consumers is high, consumer stockpiling can be used as a device for the firm to identify preferences and price discrimination. Welfare analysis suggests that consumer stockpiling improves consumer surplus and profit despite the associated stockpiling-based pricing.