Trade Wars and Trade Talks with Data

How large are optimal tariffs? What tariffs would prevail in a worldwide trade war? How costly would be a breakdown of international trade policy cooperation? And what is the scope for future multilateral trade negotiations? I address these and other questions using a unified framework which nests traditional, new trade, and political economy motives for protection. I find that optimal tariffs average 62 percent, world trade war tariffs average 63 percent, the government welfare losses from a breakdown of international trade policy cooperation average 2.9 percent, and the possible government welfare gains from future multilateral trade negotiations average 0.5 percent. Optimal tariffs are tariffs which maximize a political economy augmented measure of real income.

LSE Continental Breakfast 7: the business consequences of a breakdown in exit negotiations

The seventh Continental Breakfast seminar at the LSE, held under Chatham House rules, focused on the potential implications that a breakdown of the Brexit negotiations would have for UK businesses. The overall message was that the consequences of such a breakdown - a "no deal" outcome - would be severe. Angelos Angelou (LSE) reports on the discussion

The Reality and Masquerade behind Bargaining over Welfare Pie Sizing, Delivery and Slicing.

The present analysis addresses the apparently critical issue of circulation of wealth in society. Three actors play the game of welfare-related taxation. The first actor, in the role of Negotiator No.1, stands up for citizens’ legal and moral rights to primary needs. The second actor, in the role of Negotiator No.2, proceeds in response to public will for the provision and delivery of public goods. Quite the opposite, the third actor, hereinafter named the Voter, who represents the taxpayers, prefers personal consumption to moral understanding and public activity. In fact, backed by electoral maneuvering, the Voter emanates a risk to break down negotiations. The result of the simulation provides an evidence for the claim that a 50% median income is close enough to be considered a realistic choice of poverty line within the variety or rules of the alternating-offers bargaining game and conditions for unanimous consent of voter-citizens.bargaining; policy; public goods; simulation; taxation; voting

Sequential Bilateral Bargaining and the Shapley value

We extend Ilya Segal's work on bilateral contracting in the presence of externalities to the case of bilateral bargaining in the presence of externalities. Similarly to Segal's work, we prove our results for highly general settings, and provide examples of applications.Bargaining, Non-cooperative foundations of cooperative game theory

Financing a portfolio of projects

This paper shows that investors financing a portfolio of projects may use the depth of their financial pockets to overcome entrepreneurial incentive problems. Competition for scarce informed capital at the refinancing stage strengthens investors’ bargaining positions. And yet, entrepreneurs’ incentives may be improved, because projects funded by investors with “shallow pockets” must have not only a positive net present value at the refinancing stage, but one that is higher than that of competing portfolio projects. Our paper may help to understand provisions used in venture capital finance that limit a fund’s initial capital and make it difficult to add more capital once the initial venture capital fund is raised

Vertical Integration in the Presence of Upstream Competition

We analyze vertical integration in the case of upstream competition and compare outcomes to the case where upstream assets are owned by a single agent (i.e., upstream monopoly). In so doing, we make two contributions to the modelling of strategic vertical integration. First, we base industry structure – namely, the ownership of assets – firmly within the property rights approach to firm boundaries. Second, we model the potential multilateral negotiations using a fully specified, non-cooperative bargaining model designed to easily compare outcomes achieved under upstream competition and monopoly. Given this, we demonstrate that vertical integration can alter the joint payoff of integrating parties in ex post bargaining; however, this bargaining effect is stronger for firms integrating under upstream competition than upstream monopoly. We also consider the potential for integration to internalize competitive externalities in a manner that cannot be achieved under non-integration; i.e., by favouring internal over external supply. We demonstrate that ex post monopolization is more likely to occur when there is an upstream monopoly than when there is upstream competition. Our general conclusion is that the simple intuition that the presence of upstream competition can mitigate and reduce the incentives for socially undesirable vertical integration is misplaced and, depending upon the strength of downstream competition (i.e., product differentiation), the opposite could easily be the case. Journal of Economic Literature Classification Number: L42vertical integration, foreclosure, monopolization, bargaining,competition.

When the powerful drag their feet

We examine the timing of group decisions that are taken by weighted voting. Decision-making is in two stages. In the second stage, players vote on a policy restriction. In the first stage, players vote to determine the timing of the second-stage decision: “early”, before players’ types are revealed, or “late”. Players differ in both size and voting power. We show that players with greater power tend to prefer a late vote, whereas less powerful players tend to want to vote early. By contrast, large players tend to prefer an early vote and small players a late vote. We present evidence from the literatures on corporate governance, international relations, European Union governance, and oil extraction. We examine an extension in which players choose the qualified majority threshold besides the timing of the second-stage vote

Vertical Integration in the Presence of Upstream Competition

We analyse vertical integration when there is upstream competition and compare outcomes to the case where upstream assets are owned by a single agent (i.e., upstream monopoly). In so doing, we make two contributions to the modelling of strategic vertical integration. First, we base industry structure – namely, the ownership of assets – firmly within the property rights approach to firm boundaries. Second, we model the potential multilateral negotiations using a fully specified non-cooperative bargaining model designed to easily compare outcomes achieved under upstream competition and monopoly. Given this, we demonstrate that vertical integration can alter the joint payoffs of integrating parties in ex post bargaining; however, this bargaining effect is stronger for firms integrating under upstream competition than upstream monopoly. We also consider the potential for integration to internalise competitive externalities in manner that cannot be achieved under non-integration. We demonstrate that ex post monopolization is more likely to occur when there is an upstream monopoly than when there is upstream competition. Our general conclusion is that the simple intuition that the presence of upstream competition can mitigate and reduce the incentives for socially undesirable vertical integration is misplaced and, depending upon the strength of downstream competition (i.e., product differentiation), the opposite could easily be the case.vertical integration, foreclosure

The Settlement of Contract Negotiation Disputes: A Labor Viewpoint

Simuleringsmodeller kan användas för att bättre förstå och förutspå människors rörelse i olika gatumiljöer. Olika typer av modeller är bra på olika saker, med vissa kan man på makronivå simulera hundratusentals personer samtidigt för att få en överblick och med vissa kan man gå ner på mikronivå och följa enskilda individers rörelse. Problemet med dessa modeller är att de inte tar hänsyn till det faktum att merparten av människor i en folkmassa inte är ensamma, ca 70 procent av personerna har kompisar, kollegor eller anhöriga som de vill hålla sig nära. Den här rapporten tar hänsyn till dessa grupper av människor, det tas även hänsyn till stillastående personer runt omkring i den simulerade miljön. I denna rapport belyses fördelarna och möjligheterna som nns med att använda simulering som hjälpmedel vid planering av olika byggnadsprojekt. Syftet med projektet är att skapa en simuleringsplattform och med denna simulera människors rörelser i Umeå centrum. Umeå centrum har genomgått ombyggnationer under det senaste året och genom att jämföra simulering av både den ursprungliga layouten och den nybyggda så erhölls följande resultat. I den nybyggda layouten så var 　ödet av människor bättre, enligt simuleringen så tjänade personerna som rörde sig i centrum i snitt en sekund på grund av den minskade trängseln. Det nns kommersiell mjukvara för att simulera människors rörelse men i och med skapandet av denna rapport visas att motsvarande resultat kan fås med relativt enkla medel. Med denna simuleringsplattform kan man dessutom lätt rita upp de miljöer man vill simulera samt inkludera några fenomen som inte nns med i de kommersiella varianterna. I detta projekt så har fokus legat på resultatet och inte på att få simuleringen att gå så snabbt som möjligt, så det nns utrymme för an hel del förändringar för att snabba upp simuleringsprocessen