石川 城太

This paper incorporates key stylized facts about the transport sector into the conventional international oligopoly model and explores how protectionist policies perform differently when transport costs are endogenous and subject to the backhaul problem (i.e., the imbalance of shipping volume in outgoing and incoming routes). A country’s protectionist policies, which benefit domestic firms and harm foreign firms in the conventional model, can harm domestic firms and benefit foreign firms if carriers avoid the backhaul problem. Protectionist policies may also lead to a facilitating practice. In the absence of the backhaul problem, both domestic and foreign consumers lose from protectionist policies.

The paper analyzes multinational enterprises' incentives to manipulate internal transfer prices to take advantage of tax differences across countries, and implications of transfer-pricing regulations as a countermeasure against such profit shifting. We find that tax-motivated foreign direct investment (FDI) may entail inefficient internal production but may benefit consumers. Thus, encouraging transfer-pricing behavior to some extent can enhance social welfare. Furthermore, we consider tax competition between two countries to explore its interplay with transfer-pricing regulations. We show that the FDI source country will be willing to set a higher tax rate and tolerate some profit shifting to a tax haven country if the regulation is tight enough. We also indicate a novel mechanism through which it is the larger country that undertakes tax-motivated FDI, the pattern we often observe in reality.

In international trade, transportation requires a round trip for which a transport firm has to commit to shipping capacity that is sufficient to meet the maximum shipping volume. This may cause the “backhaul problem.” Trade theory suggests that, facing the problem, transport firms with market power adjust their freight rates strategically when import tariffs change. As a consequence, a country reducing its import tariffs may experience an increase in exports as well as imports. Using worldwide data covering 1995–2007, we find evidence that supports these predictions: a 1% reduction in an importer's tariffs increases the import freight rates by around 0.8%; decreases the export freight rates by around 1.1%; and increases the export quantity by 0.6% to 1%. These findings indicate a new mechanism through which import-tariff reductions lead to export expansions.

We examine how trade liberalization affects South’s incentive to protect intellectual property rights (IPR) in a North–South duopoly model where a low‐cost North firm competes with a high‐cost South firm in the South market. The North firm serves the South market through either exports or foreign direct investment (FDI). The extent of effective cost difference between North and South depends on South’s imitation, which in turn depends on South’s IPR protection and absorptive capacity and North firm’s location choice, all of which are endogenously determined in our model. For a given level of IPR protection, South’s absorptive capacity under exports may be greater than under FDI. Even though innovation is exogenous to the model (and hence unaffected by South’s IPR policy), strengthening IPR protection in South can improve its welfare. The relationship between trade costs and the degree of IPR protection that maximizes South welfare is non‐monotone. In particular, South has an incentive to protect IPR only when trade costs are moderate. When masking technology or licensing is incorporated into the model, however, some protection of IPR may be optimal for South eve

Trade barriers due to transport costs are as large as those due to tariffs. This paper incorporates the transport sector into a standard model of international trade with perfectly competitive output sectors and studies the effects of trade and industrial policies. Transport firms need to commit to a shipping capacity sufficient for a round trip, with a possible imbalance of shipping volumes in two directions. This imbalance is known as the "backhaul problem." As transport firms attempt to avoid this problem, a tariff in one sector may affect other independent import and/or export sectors. In particular, domestic tariffs may backfire: domestic exports may also decrease, harming domestic export sectors and the domestic economy. This finding contributes to the literature on how import liberalization may generate a positive effect on the liberalizing country's exports by identifying a new channel through endogenous changes in transport costs given the backhaul problem.

This paper studies greenhouse-gas emission (GHG) controls in the presence of international carbon leakage through international firm relocation. In a new economic geography model (NEG model) with two countries (‘North’ and ‘South’), only North sets a target for GHG emissions. We compare the consequences of emission quotas and emission taxes under trade liberalization on location of two manufacturing sectors with different emission intensities and degrees of carbon leakage. With low trade costs, further trade liberalization increases global emissions by facilitating carbon leakage. Regulation by quotas leads to spatial sorting, resulting in less carbon leakage and less global emissions than regulation by taxes.

We analyze the provision of repair services (aftermarket services that are required for a certain fraction of durable units after sales) through an international duopoly model in which a domestic firm and a foreign firm compete in the domestic market. Trade liberalization in goods, if not accompanied by the liberalization of foreign direct investment (FDI) in services, induces the domestic firm to establish service facilities for repairing the foreign firm’s products. This weakens the firms’ competition in the product market, and the resulting anti-competitive effect hurts consumers and<br /> reduces world welfare. Despite the anti-competitive effect, trade liberalization may also hurt the foreign firm because the repairs reduce the sales of the imported good in the product market. Liberalization of service FDI helps resolve the problem because it induces the foreign firm to establish service facilities for its own products.

Using the footloose capital model with two countries, this paper studies different impacts of emission taxes and quotas on firm location and global emissions under trade liberalization. If only one country (North) sets a target of emissions, firms may have incentive to relocate to the other country (South). That is, the pollution haven effect could arise. We show that a further decrease in trade costs, given an emission regulation in North, increases firm relocation and global emissions only if trade costs are relatively low. Moreover, compared with emission taxes, emission quotas moderate firm relocation, which results in less pollution haven and hence less global emissions.

This paper studies environmental management policy when two fossil-fuel-consuming countries non-cooperatively regulate greenhouse-gas emissions through emission taxes <br /> or quotas. The presence of carbon leakage caused by fuel-price changes affects the tax-quota equivalence. We explore each country&#039;s incentive to choose a policy instrument in a two-stage policy choice game and find subgame-perfect Nash equilibria. This sheds new light on the questions of which policy instrument is more stringent and of why adopted instruments could be different among countries. In particular, our result suggests a reason why developing countries tend to employ emission taxes, while developed countries tend to adopt quotas.

We explore the effects of environmental and trade policies with negative consumption externalities when a domestic firm and a foreign rival produce imperfect substitutes and compete in the domestic market. Consumption of the foreign product generates more emissions than that of the domestic product. Emission taxes reduce emissions, harm the foreign firm, but may benefit the domestic firm. Tariffs could mitigate externalities more "effectively" than emission taxes. Consumption subsides provided to the domestic product may raise emissions and worsen domestic welfare. Stringent environmental policies may induce the foreign firm to produce an environmentally friendly good, though environmental damages may increase.

In the framework of international Cournot oligopoly, we analyze welfare-enhancing<br /> policies when policymakers have only limited information on demand and cost structures.<br /> We show that even if policymakers have no idea about costs and demand, they<br /> can raise welfare by introducing a small production subsidy. If the government knows<br /> that demand is not very convex, a small tariff can be used to enhance welfare. With<br /> strategic complements, a small import reduction by an import quota deteriorates welfare<br /> while a small increase in the number of domestic firms improves welfare. In other<br /> cases, some more information is required to determine right policies.

This paper sets out a single monopoly model and examines the effects of various trade policies on domestic, foreign and world economies under both segmented and integrated markets. In the segmented~markets case, the spillover effects which stem from non~constant marginal costs are explicitly dealt with. In the integrated-markets case, trade policies are examined in two different notions of market integration. It is shown that the curvature of demand curves are crucial for results and that trade restrictions taken by one country may benefit the other country and/or the world economy.

Using a simple Cournot-oligopoly model, the paper examines the effects of voluntary export restraints (VERs) on profits, market shares, consumers' surplus, and domestic welfare when the domestic market is open to foreign direct investment (FDI) or exports from a third country. A VER may induce FDI from the VER-restricted country or exports from the third country. Under certain circumstances, the domestic firm loses from a VER. Even if the domestic firm gains, the increase in the market share of the domestic country induced by the VER could be less than that of the third country.

This note further develops Ikema's (1990, 1991) diagrammatic demonstration of the Cournot-oligopoly equilibrium on the price-quantity plane. It is shown that Ikema's method can be used to illustrate the Stackelberg and Bertrand equilibria on the price-quantity plane. Furthermore, we algebraically derive the "monopoly-equilibrium" curve and show that the Cournot-oligopoly equilibrium is stable if the monopoly-equilibrium curves for all producers are upward sloping.

In the context of an international duopoly with product differetiation and conjectural variations, this paper examines the equivalence of several policies that are designed so as to restrict domestic imports to a certain exogenous level and ranks them from the point of view of consumer prices, profits, and economic welfare. The particular value of conjectural variations and the slope of reaction curves are crucial for the ranking. The ranking on the basis of domestic welfare and world welfare is directly opposite to the ranking on the basis of foreign welfare. Tariffs and quotas are never equivalent in our model. © 1994.

This paper considers a model with one primary factor, one intermediate good, and two final goods. Increasing returns to scale are introduced into the production of the intermediate good to analyze trade patterns and gains from trade with two assumptions about the market structure of the intermediate good: average cost pricing and monopoly. Free trade does not necessarily lead to gains for the economy and either specialization or multiple equilibria are obtained. This paper also provides interesting comparisons between the types of market structure, showing, for example, that monopoly can be preferred to average cost pricing. © 1992.

This paper presents a simple dynamic model which allows for changes in both industrial structure and trade patterns during the process of economic growth. Learning by doing in the producer-service sector is the source of endogenous growth. Interesting interdependences between economic growth and the structure of the economy are obtained: economic growth is accompanied by changes in industrial structure and comparative advantage, while changes in industrial composition of the manufacturing sector accelerate economic growth. Furthermore, this paper analyzes the relationship between economic growth and the endowment structure, and the effects of two types of technology transfers on economic growth. © 1992.