Canadian Journal of Economics-Revue Canadienne D Economique最新文献

We show the effects of cross-ownership on product differentiation, consumer surplus and welfare under Cournot and Bertrand competition. Under Cournot competition, cross-ownership increases (decreases) product differentiation if demand expansion following product differentiation is large (small). Under Bertrand competition, cross-ownership may increase or decrease product differentiation regardless of the demand expansion effect of product differentiation. Cross-ownership may increase consumer surplus and welfare under both Cournot and Bertrand competition. Demand expansion following product differentiation and the type of product market competition play important roles for the effects of cross-ownership in an industry with endogenous product differentiation. We also show that Cournot competition may create higher consumer surplus and welfare compared with Bertrand competition.

Research has extensively explored why firms use their consumer information to price discriminate between repeat and new customers. This paper incorporates overlapping ownership and explores a more nuanced explanation for the practice. We isolate the different and interactive effects of overlapping ownership in different periods on equilibrium outcomes. In our explanation, firms use overlapping ownership to increase repeat purchase and customer retention and therefore may charge higher prices for both repeat and new customers, when they choose behaviour-based pricing rather than uniform pricing. As a result, if the degree of overlapping ownership is not too small, behaviour-based pricing benefits firms but hurts consumers.

With the help of a new, comprehensive sanctions database and utilizing the latest developments in the structural gravity literature, we estimate the effects of economic sanctions on international trade. We demonstrate that the average effects of sanctions hide significant heterogeneity depending on the type of sanctions considered, their duration, objectives and sender types. We also zoom in on the sanctions against Iran. We find that their effects are significant but also widely heterogeneous across sanctioning countries, even within the European Union, and depend on the direction of trade. We complement the aggregate analysis with estimates for 170 sectors, showing that sanctions have been effective in decreasing bilateral trade at the sectoral level while the effects vary significantly across sectors and across complete versus partial trade sanctions.

If immigration can benefit the Canadian economy, but must be limited to realize the benefit, what is the optimal level? The Canadian government is increasing immigration rates to levels not reached since the 1920s in the hope of addressing labour shortages and sluggish economic growth. We argue that economic immigration in the Canadian context should aim to raise GDP per capita in the population, including the newcomers, and examine the potential for increases in Canadian immigration rates to achieve this objective. Our analysis suggests that Canada is not well positioned to leverage heightened immigration to increase GDP per capita owing primarily to weak capital investment and quantity–quality tradeoffs in immigrant selection. We propose a policy rule for defining the optimal level of economic immigration.

This study investigates the welfare consequences of common ownership in a successive vertical oligopoly, in which upstream firms produce a homogeneous input and compete in quantities, while downstream firms produce differentiated final products and compete either in quantities or prices. Common ownership in both markets internalizes a negative horizontal externality and a positive vertical externality. The interaction between these externalities shapes market outcomes. Our main results are summarized as follows. If the downstream market is monopolized, common ownership always improves welfare. However, if the upstream market is monopolized, common ownership benefits welfare under Bertrand competition but harms it under Cournot competition when the downstream market is competitive. Further, greater upstream competition weakens the pro-competitive effect. Under Bertrand (Cournot) competition, common ownership harms welfare unless the upstream is (both upstream and downstream markets are) highly concentrated. These results suggest that whether common ownership benefits consumers and social welfare is crucially dependent on the competitiveness of upstream and downstream markets and the competition mode in the downstream market.

This paper revisits Baker et al.'s (2016) main finding that shows the significant negative impacts of shocks to the Economic Policy Uncertainty index on the US aggregate economic activity. We focus on subsample analyses with sample periods extended to December 2022. We find that shocks to the index do not significantly affect the economy during the period from September 2008 to December 2019, in contrast to significant negative impacts found in the sample ending earlier. Interestingly, this feature is specific to the Economic Policy Uncertainty index, while other popular uncertainty measures retain downward pressures on the economy across all of the subsample periods under examination. Economic Policy Uncertainty again deters economic activity once the COVID-19 period is included in the sample, implying that the size of shocks and/or the state of the economy may play an additional role for its transmission.

This paper uses digitized US trade flows data at the customs district level from 1870 to 1900 to investigate whether trade shocks had an effect on the size and composition of the population of US ports and on their economic activity. I find that trade increased the population of districts, driven principally by growth in urban populations, and that manufacturing activity also increased. However, these results dissipate rapidly with distance: counties adjacent to ports do not see similar gains from trade booms at nearby ports. My results imply that trade was a contributing factor in the structural transformation of America's economy.

Firms can form partial passive ownership arrangements by acquiring equity shares in competitors' profits. We consider a duopoly model in which products are differentiated along both vertical and horizontal dimensions and one firm may acquire the other firm's equity shares before they engage in strategic competition. We identify equilibrium equity shares and characterize how the choice of equity shares depends on three previously unexplored factors: (i) the size of the market, (ii) the degree of horizontal product differentiation and (iii) the degree of vertical product differentiation. Whether an increase in the size of the market increases firm's incentive to hold a stake in the rival depends on whether the acquiring firm is a high-quality firm or a low-quality firm. The effect of vertical product differentiation also depends on the type of the acquiring firm, high-quality vis-à-vis low-quality. On the contrary, an increase in horizontal product differentiation can increase firm's incentive to hold a stake in the rival, irrespective of the type of the acquiring firm. We also find that the equilibrium levels of consumer welfare and social welfare may be lower compared to the case of no partial passive ownership.

Our analysis begins with an empirical investigation of how employment concentration in industries and occupations across regions of the United States has changed over time and how regional specialization has changed. Results show that industry concentration and specialization indices have fallen, while occupation concentration and specialization indices have risen. Using this background as motivation, we develop a model in which the comparative advantage of regions lies in their productivity of supplying functions such as law, finance, advertising and engineering, to multiple sectors. Productivity differences specific to region functions shape the location decisions of industries that use multiple functions and hence determine patterns of regional specialization both in functions and in sectors. A key parameter is the cost of sourcing functions from a different region (fragmentation costs), and we show that a fall in this cost mimics the data: sector concentration and regional specialization fall and function concentration and specialization rise. At high fragmentation costs, regional comparative advantage in sectors determines general equilibrium analogous to a Heckscher–Ohlin model (HO). At low fragmentation costs, comparative advantage in functions drives an equilibrium that has little resemblance to a HO world.

Productivity growth in many countries has remained low for several years. Whether new technologies can reverse the trend depends on the scope of their impact and scale of their adoption—two dimensions of technical change that are historically difficult to measure. Here, we elaborate on the materials and methods presented in Alexopoulos's presidential address at the 2024 Canadian Economics Association meeting. Specifically, we discuss how applying natural language processing and text mining to library collections and cataloguing materials can help: (i) identify new technologies as they come to market and (ii) track their uses and spread over time. We further describe how our insights can be used to uncover general purpose technologies and macro-innovations in both the past and the present. An application to current data suggests that AI and robotics are responsible for an increasing share of recent technical change. Moreover, they resemble past early-stage general purpose technologies and thus do promise a reversal in productivity trends as their adoption increases. Going forward, our new methods should be especially useful to economists and policy-makers who need to track future development and adoption of key technologies—especially during periods of rapid innovation.