Bilateral Commitment

We consider non-cooperative environments in which two players have the power to commit but cannot sign binding agreements. We show that by committing to a set of actions rather than to a single action, players can implement a wide range of action profiles. We give a complete characterization of implementable profiles and provide a simple method to find them. Profiles implementable by bilateral commitments are shown to be generically inefficient. Surprisingly, allowing for gradualism (i.e., step by step commitment) does not change the set of implementable profiles.Commitment; self-enforcing; generic inefficiency; agreements; Pareto-improvement

Bilateral Commitment

We consider non-cooperative environments in which two players have the power to commit but cannot sign binding agreements. We show that by committing to a set of actions rather than to a single action, players can implement a wide range of action profiles. We give a complete characterization of implementable profiles and provide a simple method to find them. Profiles implementable by bilateral commitments are shown to be generically inefficient. Surprisingly, allowing for gradualism (i.e., step by step commitment) does not change the set of implementable profiles.commitment, self-enforcing, treaties, inefficiency, agreements, Pareto-improvement

The Role of Commitment in Bilateral Trade

We examine the buyer-seller problem under different levels of commitment. The seller is informed of the quality of the good, which affects both his cost and the buyer’s valuation, but the buyer is not. We characterize the allocations that can be achieved through mechanisms in which, unlike with full commitment, the buyer has the option to "walk away" after observing a given offer. We further characterize the equilibrium payoffs that can be achieved in the bargaining game in which the seller makes all the offers, as the discount factor goes to one. This allows us to identify how different levels of commitment affect outcomes, and which constraints, if any, preclude efficiency.Bargaining, Mechanism design, Market for lemons

The Role of Commitment in Bilateral Trade

We examine the buyer-seller problem under different levels of commitment. The seller is informed of the quality of the good, which affects both his cost and the buyer's valuation, but the buyer is not. We characterize the allocations that can be achieved through mechanisms in which, unlike with full commitment, the buyer has the option to "walk away" after observing a given offer. We further characterize the equilibrium payoffs that can be achieved in the bargaining game in which the seller makes all the offers, as the discount factor goes to one. This allows us to identify how different levels of commitment affect outcomes, and which constraints, if any, preclude efficiency.bargaining; mechanism design; market for lemons

Unit commitment with transmission constraints in deregulated power market

As the power industry across the world is undergoing a radical change by separation of transmission from generation activities, scope of competition by bidding or through provision of bilateral transactions in spot markets exists between different market players of generation and transmission. So there is a need for the unit commitment in power industry with generation biddings, load biddings and bilateral transaction biddings. In general unit commitment can be formulated as nonlinear, large scale, mixed integer combinatorial optimization problem. For quick response, piece-wise linearization of cost function, slack terms with high penalty factor are incorporated in unit commitment along with all generator, system, operator and line constraints. Then unit commitment with three-part generator bidding, load bidding and bilateral transaction with both elastic and inelastic parts is performed which is suitable for the recent deregulated power industry and tested on a test case of ten generators with three bus network

Global Aid Allocation: Are Nordic Donors Different?

The Nordic development assistance programs have earned a reputation for commitment to human rights and democracy. Is the reputation deserved? We address this question by comparing how much aid donors give and to which recipient countries. Using a global panel data set, spanning the period 1980-99 and 91 recipient countries, we find that individual bilateral donors vary considerably from one another. Nordic aid distribution differs significantly from other bilateral aid donor patterns: Norway, Denmark, Sweden and Finland provide more aid to democracies but do not penalise poor trade policies. Unlike other bilateral donors the four Nordics do not provide more aid to political allies. We also find some evidence that recipients with a good human rights record receive more aid from Nordic donors.

Bilateral oligopoly and quantity competition

Bilateral oligopoly is a strategic market game with two commodities, allowing strategic behavior on both sides of the market. When the number of buyers is large, such a game approximates a game of quantity competition played by sellers. We present examples which show that this is not typically a Cournot game. Rather, we introduce an alternative game of quantity competition (the market share game) and, appealing to results in the literature on contests, show that this yields the same equilibria as the many-buyer limit of bilateral oligopoly, under standard assumptions on costs and preferences. We also show that the market share and Cournot games have the same equilibria if and only if the price elasticity of the latter is one. These results lead to necessary and su¢ cient conditions for the Cournot game to be a good approximation to bilateral oligopoly with many buyers and to an ordering of total output when they are not satisfied.Quantity competition, Cournot, strategic foundation, commitment

Bilateral “WTO-Plus” Free Trade Agreements: The WTO Trade Policy Review of Singapore 2004

The World Trade Organisation’s 2004 Trade Policy Review of Singapore (WTO-TPR Singapore 2004) depicts the small and outward-oriented economy as one of the most open country to international trade and investment. The review highlights the benefits of the outward-oriented strategy that has enabled the Singapore economy to weather recent external shocks such as the Asian financial crisis to the SARS and to the recent unfavourable conditions in the Middle East. In particular, the report commended Singapore’s efforts on its liberalization of the services sector and its economic benefits to consumers and global trade. However, the WTO-TPR Singapore 2004 highlights several key areas of concerns: (a) the commitment to multilateral agreements with the rising number of bilateral free trade agreements signed by Singapore and (b) the lack of growth of total factor productivity, a key indicator for long-run efficiency of the economy. The paper addresses the above key concerns raised in the WTO’s TPR of Singapore in terms of its commitment to global trade in terms of WTO-plus bilateral FTAs, which intends to support multilateral trading system, and its overall industrial strategies to raise its competitiveness.