International Journal of Economic Theory最新文献

We analyze the effects of a debt relief, that is, a decrease in public debt of a low-income country financed by a high-income country, on environmental quality. Under perfect mobility of assets, the debt relief increases the overall capital stock, and environmental quality when public abatements are sufficiently efficient. Welfare in both countries can also improve. Under a weak mobility of assets, capital does no more increase in the richest country, but environmental quality can improve. This comes from a crowding-out effect of debt in the high-income country, which does no more take place when the mobility of assets is significant.

We examine how the degree of financial market incompleteness affects welfare gains from international cooperation on capital controls. When financial markets are incomplete, international risk sharing is disturbed. However, the optimal global policy significantly reverses the welfare deterioration due to inefficient risk sharing. We show that when financial markets are more incomplete, the welfare gap between the optimal global policy and the Nash equilibrium increases, and the welfare gains from international cooperation on capital controls then become larger.

We consider an overlapping generations economy with altruism toward parents and a long-lived asset that delivers no dividends (pure bubble asset). We explore the role of ascendant altruism on the dynamic properties of equilibrium and rational bubbles in the cases of exogenous and endogenous growth.

This paper studies the possibility of a merger when firms are asymmetric in marginal costs and produce vertically and horizontally differentiated products. The merger of two firms that produce the better-quality products (w.r.t. third firm) is possible, if the quality difference (net of cost) or the horizontal product differentiation between the firms that merge is high. If the quality difference (net of cost) between the merged firms and the non-merged firm increases, then a merger is possible if the quality difference (net of cost) and the horizontal product differentiation of the merged firms are significantly high.

This paper examines the optimal specific tax/subsidy policy for a monopoly under multi-tier pricing. It shows, among other things, that an increase in a specific tax on any tier will raise (reduce) the cumulative output of preceding (succeeding) tiers in the non-uniform scheme. In contrast, increasing the tax under the uniform scheme will reduce the output for all tiers and their cumulative output. Furthermore, the paper derives the optimal policy locus and shows the indeterminacy of optimal tier rates in the non-uniform scheme. The case of linear/nonlinear demand and quadratic cost illuminates numerous interesting features.

Consider a small open Harris and Todaro's model. This paper analyzes the impact of the policy of environmental protection on skilled–unskilled wage inequality. We find that, in the economy with urban unemployment, if the elasticity of substitution between unskilled labor and pollution in the urban low-skill sector is small (large) enough then a rise in the pollution tax will expand (narrow down) skilled–unskilled wage inequality. In addition, we prove that, in the economy with full employment, a rise in the pollution tax will raise the skilled–unskilled wage inequality, if the elasticity of substitution between unskilled labor and pollution is larger than that between capital and pollution in the urban low-skill sector.

We compare collusion stability under Bertrand and Cournot duopoly with differentiated network products. Contrast to previous studies, we show that (i) the range of collusion incentive is narrower under Cournot competition than under Bertrand competition, unless network externalities are sufficiently strong; (ii) collusion in prices (quantities) is more stable than in quantities (prices) if network externalities are strong (weak); and (iii) finally, regardless of the strength of network externalities, collusion under Bertrand competition is more stable for high levels of substitutability than under Cournot competition.

We study the dynamic property of a constant returns two-sector model with sector-specific externality. In this study, we consider two types of consumption good, one of which is a pure consumption good and the other is a consumable capital good. Then, we examine the case where households tend to consume more pure consumption goods and consume less consumable capital ones. We show that if a consumable capital good is inferior it is possible that indeterminacy occurs around a steady state without capital intensity reversal between the private and the social levels.

Pecuniary externalities in models with financial friction justify macroprudential policies for preventing excessive risk taking by economic agents. We extend the Diamond and Rajan model of banks with production factors and explore how a pecuniary externality affects a bank's leverage. We show that the laissez-faire banks in our model take on excessive risks compared with the constrained social optimum. Our numerical simulations suggest that the crisis probability is 2–3 percentage points higher in the laissez-faire economy than in the constrained social optimum.