Suchergebnisse

Using a differentiated oligopoly, this paper studies the effects of tax incentives on the structure of a domestic industry in terms of price, output, profit, and entry/exit, taking account of technology transfer through FDI. It is found that if the government of the host country provides more tax relief for foreign firms, it will raise total output and reduce the price index. More foreign firms will enter the industry while certain existing host firms will have to exit. Consumers are better off if income is unchanged; otherwise, the change in social welfare is ambiguous in general and several sufficient conditions ensuring definite outcomes have been identified. This suggests that the government should be cautious in reducing taxes to attract FDI and should differ their preferential tax treatments across industries.

This paper studies the effects of principal's risk aversion on principal-agent relationship under hidden information. It finds that the agent's equilibrium effort increases and approaches the efficient level as the principal's risk aversion increases and tends to infinity. Allowing for random participation by the agent, his effort can be efficient even when the principal's risk aversion is finite. For the case of common agency with random participation, it is optimal for the principals to make the agent the residual claimant on profits and the principals' net profits monotonically decrease to zero when their risk aversion tends to infinity.

PurposeAlthough economic theory generally does not support government intervention in international trade, casual observation shows that many developing countries adopt certain trade policies to promote their exports. The objective of this paper is to answer the question that whether developing countries can benefit from export promotion.Design/methodology/approachThis paper considers a developing country which has to import new technology from the world market to improve its productivity. If it has certain economic rigidities, the country is short of foreign exchange and domestic firms cannot import an adequate amount of new technology. Even if there is no rigidity, domestic firms may not have sufficient incentive to invest in new technology. Therefore, the government can step in to subsidize exports. Through an analytical model, this paper investigates in what conditions the measures of export promotion can stimulate production and employment, and improve efficiency and social welfare.FindingsThis paper analyzes two effects of export promotion: raising the incentive of capital investment and reducing capital goods shortage caused by foreign exchange constraint. These effects might be the economic rationale for developing country governments to promote exports. It is found that export promotion can definitely raise employment and productivity, but whether these measures can stimulate the supply to the domestic market and improve domestic welfare depends on the sufficient and necessary condition given in the paper.Originality/valueEstablishes an analytical model to investigate in what conditions the measures of export promotion such as export subsidies and domestic currency devaluation can stimulate production and employment, and can improve efficiency and social welfare.

Both the theory and practice of using hedonic regressions to remove quality effects in price indexes are implicitly developed for monopolistic competitive markets. In this paper, we theoretically and practically analyse the application of a standard hedonic regression for an oligopoly. In the theoretical work, we recast how for an oligopoly the standard hedonic regression may be unstable. Then in the empirical work, we recommend using the weighted imputation method for constructing an index and estimating separate hedonic regressions for market segments. We apply these recommendations to estimating a quality‐adjusted price index for the Australian passenger vehicle market and find they make a substantial difference.

AbstractWe detect jumps in a high‐frequency price series of exchange‐traded funds (ETFs) that track the broad indexes of U.S. equity markets. Although many jumps (43%) are related to macroeconomic news, more jumps (57%) are not. No‐news jumps are followed by significant return reversals for at least 60 minutes. The return dynamics after news‐related jumps vary with the news characteristics. Scheduled‐news jumps are followed by reversals, whereas unscheduled‐news jumps are followed by momentum. Whether related to news or not, negative jumps are followed by stronger return reversals than are positive jumps.