On the Evolution of the Spatial Economy with Multi-unit/Multi-plant Firms: The Impact of IT Development

This paper examines how the decline of communication costs between management and production facilities within firms and the decrease in trade costs of manufactured goods affect the spatial organization of a two-region economy with multi-unit/multi-plant firms. The development of information technology decreases the costs of communication and trade costs. Thus, the fragmentation of firms is promoted. Our result indicates that, with decreasing communication costs, firms producing low trade-cost products (such as consumer electronics) tend to concentrate their manufacturing plants in low wage countries. In contrast, firms producing high trade-cost products (such as automobiles) tend to have multiple plants serving to segmented markets, even in the absence of wage differentials.

Globalization and the Evolution of the Supply Chain: who gains and who loses?

This paper focuses on two distinct facets of globalization: the decrease in the trade costs of goods and the decline of communication costs between headquarters and production facilities within firms. When the unskilled have about the same wage in the two regions, the decrease of these costs fosters the gradual agglomeration of plants in the core region accommodating the headquarters. By contrast, when the wage gap is significant, the process of integration eventually triggers the re-location of plants into the periphery. In particular, when the process of re-location is driven by falling communication costs, the welfare of all workers living in the core goes down whereas the welfare of those who reside in the periphery rises.

Monetary Policy Effects in Developing Countries with Minimum Wages

Using a Dynamic General Equilibrium (DGE) model, this study examines the effects of monetary policy in economies where minimum wages are bound. The findings show that the monetary-policy effect on a binding-minimum-wage economy is relatively small and quite persistent. This result suggests that these two characteristics of monetary policy in the minimum-wage model are rather different from those in the union-negotiation model which is often assumed to account for industrial economies.

The location of manufacturing firms and imperfect information in transport market

It is well know that transport charges are not symmetric: fronthaul and backhaul costs on a route may differ, because they are affected by the distribution of economic acitivities. This paper develops a two-regional general equilibrium model in which transport costs are determined endogenously as a result of a search and matching process. It is shown that economies or diseconomies of transport density emerge, depending on the search costs of transport firms and the relative importance of the possibility of backhaul transportation. It is found that the symmetry of the distribution of economic activity may break owing to economies of transport density when the additional search costs are small enough.

On the sustainability of a monocentric city : lower transport costs from new transport facilities

This paper proposes a general equilibrium model of a monocentric city based on Fujita and Krugman (1995). Two rates of transport costs per distance and for the same good are introduced. The model assumes that lower transport costs are available at a few points on a line. These lower costs represent new transport facilities, such as high-speed motorways and railways. Findings is that new transport facilities connecting the city and hinterlands strengthen the lock-in effects, which describes whether a city remains where it is forever after being created. Furthermore, the effect intensifies with better agricultural technologies and a larger population in the economy. The relationship between indirect utility and population size has an inverted U-shape, even if new transport facilities are used. However, the population size that maximizes indirect utility is smaller than that found in Fujita and Krugman (1995).

Revisiting the determinants of unit values

This paper studies the issue of how traded quantities affect trade prices, which has been relatively unexplored in the trade literature. By reproducing previous literatures' regressions which are based on the general equilibrium trade theories, incorporating the role of traded quantities, this paper shows a possibility of prevalence of the second degree price discrimination (quantity discount) in international trade, rather than the pricing behaviour of the general equilibrium theories.

Economic impacts of the Kra Canal : an application of the automatic calculation of sea distances by a GIS

A plan to construct a canal through the Kra Isthmus in Southern Thailand has been proposed many times since the 17th century. The proposed canal would become an alternative route to the over-crowded Straits of Malacca. In this paper, we attempt to utilize a Geographical Information System (GIS) to calculate the realistic distances between ports that would be affected by the Kra Canal and to estimate the economic impact of the canal using a simulation model based on spatial economics. We find that China, India, Japan, and Europe gain the most from the construction of the canal, besides Thailand. On the other hand, the routes through the Straits of Malacca are largely beneficial to Malaysia, Brunei, and Indonesia, besides Singapore. Thus, it is beneficial for all ASEAN member countries that the Kra Canal and the Straits of Malacca coexist and complement one another.

Modeling for the world crude oil and natural gas markets

Crude oil and natural gas have been essential energy sources and play a crucial role in the world economy. Changes in energy prices significantly impact economic growth. This study builds an econometric model to illustrate the substitute relation between crude oil and natural gas markets. Additionally, the determination of the oil and natural gas prices are endogenized, assuming imperfect competition to reflect a real market strategy. Our empirical results show that the overall performance of this system is acceptable, and the model can be applied to policy analysis for determining monetary or energy policy by introducing this model to the more comprehensive system.

Financial Policies and Dynamic Game Simulation in Poland and Hungary

Recently, steady economic growth rates have been kept in Poland and Hungary. Money supplies are growing rather rapidly in these economies. In large, exchange rates have trends of depreciation. Then, exports and prices show the steady growth rates. It can be thought that per capita GDPs are in the same level and development stages are similar in these two countries. It is assumed that these two economies have the same export market and export goods are competing in it. If one country has an expansion of monetary policy, price increase and interest rate decrease. Then, exchange rate decrease. Exports and GDP will increase through this phenomenon. At the same time, this expanded monetary policy affects another country through the trade. This mutual relationship between two countries can be expressed by the Nash-equilibrium in the Game theory. In this paper, macro-econometric models of Polish and Hungarian economies are built and the Nash- equilibrium is introduced into them.