Tsuyoshi Shinozaki, Makoto Tawada and Mitsuyoshi Yanagihara
The aim of this paper is to investigate whether a Nash equilibrium of a two-country trading economy is symmetry-breaking or not.
Abstract
Purpose
The aim of this paper is to investigate whether a Nash equilibrium of a two-country trading economy is symmetry-breaking or not.
Design/methodology/approach
The approach to tackle this topic is a theoretical treatment by the general equilibrium trade theory and game theory.
Findings
If each government's domestic policy serving private production is diminishing to the private production scale, the Nash equilibrium is not symmetry-breaking.
Originality/value
In the existing study of Chatterjee (2017), a similar result is derived by focusing on the properties of each country's GDP function. The authors, however, consider an economy where each country's PPF is strictly concave and show that the Nash equilibrium uniquely exists and this equilibrium is symmetry.
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Keywords
Binh Tran-Nam, Ngo Van Long and Makoto Tawada
This edited volume has its genesis in a conference entitled New Paradigms in Economics of Welfare and Trade under Globalisation and Regionalisation. Held at the Coogee campus of…
Abstract
This edited volume has its genesis in a conference entitled New Paradigms in Economics of Welfare and Trade under Globalisation and Regionalisation. Held at the Coogee campus of the Australian School of Taxation (Atax), University of New South Wales (Sydney, Australia) from 8th to 10th August 2006, this conference brought together economic theorists from around the globe to celebrate Murray Kemp's 80th birthday. Conference participants and presenters included a former teacher, colleagues, co-authors, senior academics and many former students of Murray. After a two-year gestation period, the volume has finally been published. Half of the chapters in this book are derived from papers presented at the conference. The remaining half of the book consists of invited papers completed after the conference. All chapters in this volume were subjected to a formal reviewing and revision process.
Kenji Fujiwara, Nobuhito Suga and Makoto Tawada
Purpose – This chapter aims to examine trade patterns and gains from trade in a two-country general equilibrium model of increasing returns and oligopoly.Approach – A general…
Abstract
Purpose – This chapter aims to examine trade patterns and gains from trade in a two-country general equilibrium model of increasing returns and oligopoly.
Approach – A general equilibrium model of increasing returns and oligopoly.
Findings – The determination of patterns of specialization and trade and gains from trade highly depends on the interaction between the degree of increasing returns and market power as well as the cross-country difference in factor endowments.
Originality – Unlike the existing literature, we endogenize the determination of specialization by using an allocation curve approach by Ethier (1982). To our knowledge, there is no comparable study that incorporates Ethier's (1982) approach to oligopolistic models of international trade.
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Purpose − This chapter reconsiders the role of the WTO in the world economy, where regional free trade agreements have proliferated to threaten its basic rule of multilateral and…
Abstract
Purpose − This chapter reconsiders the role of the WTO in the world economy, where regional free trade agreements have proliferated to threaten its basic rule of multilateral and non-discriminatory tariff reduction and the deepening of globalization has developed international concern about labor and environmental standards to challenge its conventional practice of tariff negotiation.
Methodology/Approach − This chapter employs the general equilibrium approach of welfare economics in its analysis.
Findings − It is shown that the WTO should reconfirm its target of expanding and securing the market access property rights of member countries and engage in the international coordination of tariffs and other trade policy instruments to achieve this target, while leaving other policy targets such as propagating labor and environmental standards to other appropriate international organizations.
Practical implications − The steady move towards multilateral free trade has come to an end. This chapter offers a clear argument for economists and policy makers to regain confidence in the traditional role of the WTO/GATT.
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Purpose – The chapter examines whether the well-known Kemp–Wan proposition about customs unions is valid for free trade associations (FTAs).Methodology/approach – The chapter…
Abstract
Purpose – The chapter examines whether the well-known Kemp–Wan proposition about customs unions is valid for free trade associations (FTAs).
Methodology/approach – The chapter employs the assumption of perfect competition but with considerable generality.
Findings – It is shown that the Kemp–Wan proposition is valid for any form of FTA. It is also shown that sense can be made of the common conjecture that a customs union is more beneficial to the world economy than a comparable but distinct FTA.
Originality/value – The findings are of significance in view of the recent tendency of governments to prefer FTAs to customs unions.