Country asymmetries, endogenous product choice and the speed of trade liberalization

In a world with two countries which differ in size, we study theimpact of (the speed of) trade liberalization on firms' profitsand total welfare of the countries involved. Firms correctlyanticipate the pace of trade liberalization and take it intoaccount when deciding on their product choices, which areendogenously determined at the beginning of the game. Competitionin the marketplace then occurs either on quantities or on prices.As long as the autarkic phase continues, local firms are nationalmonopolists. When trade liberalization occurs, firms compete in aninternational duopoly. We analyze trade effects by using twodifferent models of product differentiation. Across all thespecifications adopted (and independently of the price v. quantitycompetition hypothesis), total welfare always unambiguously riseswith the speed of trade liberalization: Possible losses by firmsare always outweighed by consumers' gains, which come under theform of lower prices, enlarged variety of higher average qualitiesavailable. The effect on profits depends on the type of industryanalyzed. Two results in particular seem to be worth of mention.With vertical product differentiation and fixed costs of qualityimprovements, the expected size of the market faced by the firmsdetermines the incentive to invest in quality. The longer the periodof autarky, the lower the possibility that the firm from the smallcountry would be producing the high quality and be the leader in theinternational market when it opens. On the contrary, when trade opensimmediately, national markets do not play any role and firms fromdifferent countries have the same opportunity to become the leader.Hence, immediate trade liberalization might be in the interest ofproducers in the small country. In general, the lower the size of thesmall country, the more likely its firm will gain from tradeliberalization. Losses from the small country firm can arise when itis relegated to low quality good production and the domestic marketsize is not very small. With horizontal product differentiation (thehomogeneous good case being a limit case of it when costs ofdifferentiation tend to infinity), investments in differentiationbenefit both firms in equal manner. Firms from the small country do notrun the risk of being relegated to a lower competitive position undertrade. As a result, they would never lose from it. Instead, firms fromthe large country may still incur losses from the opening of trade whenthe market expansion effect is low (i.e. when the country is very largerelative to the other).

The labor market effects of payroll taxes in a middle-income country: Evidence from Colombia

We use a panel of manufacturing plants from Colombia to analyze how the risein payroll tax rates over the 1980 s and 1990 s affected the labor market.Our estimates indicate that formal wages fall by between 1.4% and 2.3% as aresult of a 10% rise in payroll taxes. This 'less-than-full-shifting' islikely to be the result of weak linkages between benefits and taxes and thepresence of downward wage rigidities induced by a binding minimum wage inColombia. Because the costs of taxation are only partly shifted fromemployers to employees, employment should also fall. Our results indicatethat a 10% increase in payroll taxes lowered formal employment by between4% and 5%. In addition, we find less shifting and larger disemploymenteffects for production than non-production workers. These results suggestthat policies aimed at boosting the relative demand of low-skill workers byreducing social security taxes on those with low earnings may be effectivein a country like Colombia, especially if tax cuts are targeted to indirectbenefits.

The empirics of spatial competition: evidence from European regions

The New Economic Geography literature allows detailed analysis of the factors that determine the location decisions of firms in integrated markets. However, the competitive process is modelled in a rather rudimentary way, and the empirical evidence has usually been obtained from reduced-form econometric specifications. This study describes a structural model that takes into account strategic interactions between firms. We investigate the relationship between the degree of perceived competition ¿ not only from local firms but from firms in other regions ¿ and geographic concentration. The preliminary results indicate that, in aggregate terms, local firms present stronger competition than firms in other regions. Moreover, it is confirmed that greater geographical concentration of production reduces market power, due to the intensification of local competition; however, its impact on production costs is unclear.

The empirics of spatial competition: evidence from European regions

The New Economic Geography literature allows detailed analysis of the factors that determine the location decisions of firms in integrated markets. However, the competitive process is modelled in a rather rudimentary way, and the empirical evidence has usually been obtained from reduced-form econometric specifications. This study describes a structural model that takes into account strategic interactions between firms. We investigate the relationship between the degree of perceived competition ¿ not only from local firms but from firms in other regions ¿ and geographic concentration. The preliminary results indicate that, in aggregate terms, local firms present stronger competition than firms in other regions. Moreover, it is confirmed that greater geographical concentration of production reduces market power, due to the intensification of local competition; however, its impact on production costs is unclear.

Networks of people in specialty production: family firms in the iron and steel Wire industries in Spain (1870-2000)

Capital intensive industries in specialized niches of production have constituted solid ground for family firms in Spain , as evidenced by the experience of the iron and steel wire industries between 1870 and 2000. The embeddedness of these firms in their local and regional environments have allowed the creation of networks that, together with favourable institutional conditions, significantly explain the dominance of family entrepreneurship in iron and steel wire manufacturing in Spain, until the end of the 20 th century. Dominance of family firms at the regional level has not been not an obstacle for innovation in wire manufacturing in Spain, which has taken place even when institutional conditions blocked innovation and traditional networking. Therefore, economic theories about the difficulties dynastic family firms may have to perform appropriately in science-based industries must be questioned

Networks of people in specialty production: family firms in the iron and steel Wire industries in Spain (1870-2000)

Capital intensive industries in specialized niches of production have constituted solid ground for family firms in Spain , as evidenced by the experience of the iron and steel wire industries between 1870 and 2000. The embeddedness of these firms in their local and regional environments have allowed the creation of networks that, together with favourable institutional conditions, significantly explain the dominance of family entrepreneurship in iron and steel wire manufacturing in Spain, until the end of the 20 th century. Dominance of family firms at the regional level has not been not an obstacle for innovation in wire manufacturing in Spain, which has taken place even when institutional conditions blocked innovation and traditional networking. Therefore, economic theories about the difficulties dynastic family firms may have to perform appropriately in science-based industries must be questioned

Intermunicipal cooperation and privatization of solid waste services among small municipalities in Spain

The aim of this paper is to analyze the effects of intermunicipal cooperation and privatization on the delivery costs of urban solid waste services. The results of our empirical analysis, which we conducted among a sample of very small municipalities, indicate that small towns that cooperate incur lower costs for their waste collection service. Cooperation also raises collection frequency and improves the quality of the service in small towns. By contrast, the form of production, whether it is public or private, does not result in systematic differences in costs. Interestingly, the degree of population dispersion has a significant positive relation with service costs. No evidence of scale economies is found because, it would seem, small municipalities exploit them by means of intermunicipal cooperation.

Estimation of lung cancer diagnosis and treatment costs based on a patient-level analysis in Catalonia (Spain)

Background: Assessing of the costs of treating disease is necessary to demonstrate cost-effectiveness and to estimate the budget impact of new interventions and therapeutic innovations. However, there are few comprehensive studies on resource use and costs associated with lung cancer patients in clinical practice in Spain or internationally. The aim of this paper was to assess the hospital cost associated with lung cancer diagnosis and treatment by histology, type of cost and stage at diagnosis in the Spanish National Health Service. Methods: A retrospective, descriptive analysis on resource use and a direct medical cost analysis were performed. Resource utilisation data were collected by means of patient files from nine teaching hospitals. From a hospital budget impact perspective, the aggregate and mean costs per patient were calculated over the first three years following diagnosis or up to death. Both aggregate and mean costs per patient were analysed by histology, stage at diagnosis and cost type. Results: A total of 232 cases of lung cancer were analysed, of which 74.1% corresponded to non-small cell lung cancer (NSCLC) and 11.2% to small cell lung cancer (SCLC); 14.7% had no cytohistologic confirmation. The mean cost per patient in NSCLC ranged from 13,218 Euros in Stage III to 16,120 Euros in Stage II. The main cost components were chemotherapy (29.5%) and surgery (22.8%). Advanced disease stages were associated with a decrease in the relative weight of surgical and inpatient care costs but an increase in chemotherapy costs. In SCLC patients, the mean cost per patient was 15,418 Euros for limited disease and 12,482 Euros for extensive disease. The main cost components were chemotherapy (36.1%) and other inpatient costs (28.7%). In both groups, the Kruskall-Wallis test did not show statistically significant differences in mean cost per patient between stages. Conclusions: This study provides the costs of lung cancer treatment based on patient file reviews, with chemotherapy and surgery accounting for the major components of costs. This cost analysis is a baseline study that will provide a useful source of information for future studies on cost-effectiveness and on the budget impact of different therapeutic innovations in Spain.

The Cost of ownership in the governance of interfirm collaborations

This paper investigates the selection of governance forms in interfirm collaborations taking into account the predictions from transaction costs and property rights theories. Transaction costs arguments are often used to justify the introduction of hierarchical controls in collaborations, but the ownership dimension of going from “contracts” to “hierarchies” has been ignored in the past and with it the so called “costs of ownership”. The theoretical results, tested with a sample of collaborations in which participate Spanish firms, indicate that the cost of ownership may offset the benefits of hierarchical controls and therefore limit their diffusion. Evidence is also reported of possible complementarities between reputation effects and forms of ownership that go together with hierarchical controls (i.e. joint ventures), in contrast with the generally assumed substitutability between the two.

Composition of Greenhouse Gas Emissions in Spain: an Input-Output Analysis

Extending the traditional input-output model to account for the environmental impacts of production processes reveals the channels by which environmental burdens are transmitted throughout the economy. In particular, the environmental input-output approach is a useful technique for quantifying the changes in the levels of greenhouse emissions caused by changes in the final demand for production activities. The inputoutput model can also be used to determine the changes in the relative composition of greenhouse gas emissions due to exogenous inflows. In this paper we describe a method for evaluating how the exogenous changes in sectorial demand, such as changes in private consumption, public consumption, investment and exports, affect the relative contribution of the six major greenhouse gases regulated by the Kyoto Protocol to total greenhouse emissions. The empirical application is for Spain, and the economic and environmental data are for the year 2000. Our results show that there are significant differences in the effects of different sectors on the composition of greenhouse emissions. Therefore, the final impact on the relative contribution of pollutants will basically depend on the activity that receives the exogenous shock in final demand, because there are considerable differences in the way, and the extent to which, individual activities affect the relative composition of greenhouse gas emissions. Keywords: Greenhouse emissions, composition of emissions, sectorial demand, exogenous shock.

The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU

This paper develops a comprehensive framework for the quantitative analysis of the private and fiscal returns to schooling and of the effect of public policies on private incentives to invest in education. This framework is applied to 14 member states of the European Union. For each of these countries, we construct estimates of the private return to an additional year of schooling for an individual of average attainment, taking into account the effects of education on wages and employment probabilities after allowing for academic failure rates, the direct and opportunity costs of schooling, and the impact of personal taxes, social security contributions and unemployment and pension benefits on net incomes. We also construct a set of effective tax and subsidy rates that measure the effects of different public policies on the private returns to education, and measures of the fiscal returns to schooling that capture the long-term effects of a marginal increase in attainment on public finances under c

A foundation model for marxian theories of the breakdown of capitalism

Marx and the writers that followed him have produced a number of theories of the breakdown of capitalism. The majority of these theories were based on the historical tendencies: the rise in the composition of capital and the share of capital and the fall in the rate of profit. However these theories were never modeled with main stream rigour. This paper presents a constant wage model, with capital, labour and land as factors of production, which reproduces the historical tendencies and so can be used as a foundation for the various theories. The use of Chaplygins theorem in the proof of the main result also gives the paper a technical interest.

A marxian model of the breakdown of capitalism

This paper sets out a Marxian model that is based on the one by Stephen Marglin with one sector and continuous substitution. It is extended by adding technical progress and land as a factor of production. It is then shown that capital accumulation causes the preconditions for the breakdown of capitalism to emerge; that is, it causes the organic composition of capital to rise, the rate of profit to fall and the rate of exploitation to rise. A compressed history of the idea of the breakdown of capitalism is then set out and an explanation is given as to how the model relates to this and how it may serve as the basis for further research.

Optimal regulation of specialized medical care in a mixed system

We study the optimal public intervention in setting minimum standards of formation for specialized medical care. The abilities the physicians obtain by means of their training allow them to improve their performance as providers of cure and earn some monopoly rents.. Our aim is to characterize the most efficient regulation in this field taking into account different regulatory frameworks. We find that the existing situation in some countries, in which the amount of specialization is controlled, and the costs of this process of specialization are publicly financed, can be supported as the best possible intervention.

Sources of Competitiveness in Tourist Local Systems

At the end of the XIX Century, Marshall described the existence of some concentrations of small and medium enterprises specialised in a specific production activity in certain districts of some industrial English cities. Starting from his contribute, Italian scholars have paid particular attention to this local system of production coined by Marshall under the term industrial district. In other countries, different but related territorial models have played a central role as the milieu or the geographical industrial clusters. Recently, these models have been extended to non-industrial fields like culture, rural activities and tourism. In this text, we explore the extension of these territorial models to the study of tourist activities in Italy, using a framework that can be easily applied to other countries or regions. The paper is divided in five sections. In the first one, we propose a review of the territorial models applied to tourism industry. In the second part, we construct a tourist filiere and we apply a methodology for the identification of local systems through GIS tools. Thus, taxonomy of the Italian Tourist Local Systems is presented. In the third part, we discuss about the sources of competitiveness of these Tourist Local Systems. In the forth section, we test a spatial econometrics model regarding different kinds of Italian Tourist Local Systems (rural systems, arts cities, tourist districts) in order to measure external economies and territorial networks. Finally, conclusions and policy implications are exposed.