Journal of Economics最新文献

We uniquely model an upstream mixed duopoly engaging in either uniform pricing or spatial price discrimination when facing a continuum of downstream firms. Uniform pricing generates higher welfare with a fully public firm. Uniform pricing generates greater optimal partial privatization except when the cost disadvantage of the public firm is large and downstream cost convexity is large. Similarly, welfare under optimal partial privatization is larger under uniform pricing except when the cost disadvantage of the public firm is relatively large and downstream cost convexity is large. Thus, the implications of the pricing scheme depend critically on the upstream and downstream cost structure and the ownership structure.

We study a class of signaling games in which one of the signals induces the receiver to take an action that provides the sender with the highest utility. This class of games has multiple pooling equilibria, but the equilibrium in which all senders′ types choose the signal that induces the receiver to take that action is more plausible than others. Although all the equilibria in pure strategies are divine in our class of games when the single-crossing condition is not satisfied, only the plausible equilibrium is a neologism-proof equilibrium. Therefore, we have identified a general class of signaling games in which the neologism-proof equilibrium is useful to select the most plausible equilibrium, whereas all the pooling equilibria survive divinity and other less restrictive refinements. We apply our model to an educational signaling game with two features. First, the highest level of education allows a worker to access a more productive segment of the labor market. Second, the educational system is non-selective and consequently, the cost of education does not change with the worker′s ability. As expected, there is overeducation in equilibrium because all worker′s types choose the highest level of education.

Briec et al. (2003) Aggregation of directional distance functions and industrial efficiency. J Econ 79:237–261) showed that industrial and structural efficiency are identical in the context of cost aggregation if all firms use the same technology, a single output is produced and constant returns to scale prevail. In this note it is shown that the same is also true if the technology is additive, which is equivalently referred to as independence in production or input non-jointness.

We develop general equilibrium models that incorporate an agricultural equipment sector to explore the impact of climate change on skilled-unskilled wage inequality in a small open economy, with a specific focus on the role of the domestic capital market. In the model with the agricultural equipment sector using skilled labor as input, we illustrate that climate change decreases both skilled and unskilled wages. However, its effect on wage inequality varies depending on the discrepancy of the capital intensity between the urban skilled and unskilled sectors. Moreover, if the demand for capital in the agricultural equipment sector significantly influences the capital market, this sector will not only act as a buffer, but also trigger a reversal change of wage inequality. To enhance the robustness of our findings, we extend the model to include considerations of public goods provision and taxation.

This study constructs a vertical structure model where domestic upstream and downstream firms compete with a vertically integrated foreign firm (VIFF), and examines firms’ supply decisions under domestic firms’ separation and integration. We find that the VIFF would switch its supply schedule in both markets, depending on separation and integration, which also shapes different supply decisions of the integrated domestic firm. We demonstrate that industry supply under separation might be socially beneficial if VIFF supplies the final goods, while that under integration decreases welfare unless the number of downstream firm ex-post integration is intermediate. We also examine strategic choices between separation and integration, showing that strategic integration can eliminate these welfare-distortion effects, caused by the VIFF’s switch in its supply decisions, while strategic separation might decrease welfare. Our findings highlight the possible anti-competitiveness of vertical integration when the strategic reactions between the supply shift by the VIFF and domestic integration are relevant.

This paper examines intergenerational welfare effects of public investment financed by factor income taxes in a perpetual-youth overlapping generations model. With elastic labor supply, our analysis shows that long-run employment increases as the tax rate on capital income increases. The positive long-run effect of capital income taxation on employment weakens the negative growth effect of tax distortion. In contrast, the long-run employment might decrease as the tax rate on labor income increases. Hence, the negative long-run effect of labor income taxation on employment strengthens the negative growth effect due to the tax distortion. Finally, this paper reveals that older people with more financial wealth suffer more significant welfare loss from the increased tax on each capital and labor income than younger people if the increased tax impedes economic growth. Furthermore, the increased tax harms the younger generations more than the older generations at the aggregate level because they have a larger population than the older people. However, the negative welfare effects of labor income taxation are stronger than those of capital income taxation because of the negative effect of labor income taxation on employment, which leads to a lower equilibrium growth rate.

This paper sets up a three-stage game (technology licensing, emission tax, and output) in which one foreign firm owns both process technology and environmental technology. We compare three types of licensing strategies, process technology, environmental technology, and package licensing, showing that the licensor’s preference on licensing strategy depends on the level of marginal environmental damage. Specifically, if the environmental damage caused by the production of the home firm is large, the package licensing deal is preferred by the foreign firm; otherwise process licensing is preferred. It is also found that the social welfare may be lower after licensing.

We construct a vertical product differentiation duopoly model incorporating managerial delegation and cross-ownership. By exploring the interplay of these factors, we find a U-shaped relationship between endogenous managerial delegation coefficients and cross-ownership. The difference in managerial delegation coefficients between the two firms decreases as the cross-ownership proportion increases. In an ownership structure involving cross-ownership of firms producing different quality products, managerial delegation improves firms’ profits while reducing consumer surplus and social welfare in a vertical product differentiation market. Moreover, cross-ownership intensifies the positive impact of managerial delegation on joint profits and the negative effects on consumer surplus and social welfare. Consequently, regulating cross-ownership among firms in vertically differentiated product markets is an important policy issue for competition law.

We construct an overlapping generations model in which the government chooses the tax rate that determines publicly provided education and healthcare. Education increases human capital accumulation, and healthcare improves life expectancy. Each policy is financed by taxes. Two sectors of government, the public education and public healthcare sectors, uncooperatively determine the tax rates for education and healthcare that maximize the GDP per capita and an adult’s welfare. Our main findings are as follows. First, the optimal tax rates for both branches of government based on per capita GDP maximization are uniquely determined. Second, in the case based on welfare maximization, there are multiple equilibria that can be ranked. The conclusion relies on the strategic complementary relationship between public education and healthcare, and the result is consistent with empirical data.

This paper proposes a theory about the allocation of human capital along the development process that helps to understand the controversial impact of this variable in growth regressions. We build a model in which human capital is allocated to three activities: production, tax collection (bureaucracy), and public education. At the first stage of development, countries have low effective tax rates because tax collection requires human capital, which is scarce. As countries accumulate human capital throughout the transition, the effective tax rate rises, diverting human capital from production to bureaucracy and public education. Consequently, at this stage, human capital has a weak impact on production, even when the human capital allocation is efficient. Furthermore, disparities in institutional quality may diminish the correlation between human capital and GDP.