Competition for aid and trade policy

This paper considers the optimal allocation of a given amount of foreign aid between two recipient countries. It is shown that, given consumer preferences, a country following a more restrictive trade policy would receive a smaller share of the aid if the donor country maximises its own welfare in allocating aid. If, on the other hand, the donor country allocates aid in order to maximize the sum of the welfare of the two recipient countries, the result is just the opposite. Finally, we analyze the situation where the recipient countries compete with each other for the given amount of aid. It is shown that this competition tends to lower the level of optimal tariffs in the recipient countries.

Formula apportionment and transfer pricing under oligopolistic competition

This paper demonstrates that under conditions of imperfect (oligopolistic) competition, a transition from separate accounting (SA) to formula apportionment (FA) does not eliminate the problem of profit shifting via transfer pricing. In particular, if affiliates of a multinational firm face oligopolistic competition, it is beneficial for the multinational to manipulate transfer prices for tax–saving as well as strategic reasons under both FA and SA. The analysis shows that a switch from SA rules to FA rules may actually strengthen profit shifting activities by multinationals.

Tax principles and tax harmonization under imperfect competition: A cautionary example

This paper shows that under imperfect competition, the welfare effects of indirect tax harmonization may depend crucially on whether taxes are levied by the destination or the origin principle. In a standard model of imperfect competition, while harmonization always makes at least one country better off, and may be Pareto-improving, when taxes are levied under the destination principle (which currently applies in the European Union), harmonization of origin-based taxes (as recently proposed by the European Commission) is certain to be Pareto-worsening when the preferences in the two countries are identical, and is likely to be so even when they differ.

Free software and the law. Out of the frying pan and into the fire: How shaking up intellectual property suits competition law just fine

Free software is viewed as a revolutionary and subversive practice, and in particular has dealt a strong blow to the traditional conception of intellectual property law (although in its current form could be considered a 'hack' of IP rights). However, other (capitalist) areas of law have been swift to embrace free software, or at least incorporate it into its own tenets. One area in particular is that of competition (antitrust) law, which itself has long been in theoretical conflict with intellectual property, due to the restriction on competition inherent in the grant of ‘monopoly’ rights by copyrights, patents and trademarks. This contribution will examine how competition law has approached free software by examining instances in which courts have had to deal with such initiatives, for instance in the Oracle Sun Systems merger, and the implications that these decisions have on free software initiatives. The presence or absence of corporate involvement in initiatives will be an important factor in this investigation, with it being posited that true instances of ‘commons-based peer production’ can still subvert the capitalist system, including perplexing its laws beyond intellectual property.