CURRENT ISSUES AFFECTING TRADE AND TRADE POLICY: AN ANNOTATED LITERATURE REVIEW

This review provides a base of literature describing current issues and research on the impacts of lobalization and the industrialization of agriculture and recent approaches to analyze and model agricultural trade and trade policies. Three key factors of the survey are differentiated goods, global economic integration and international supply chain linkages. The review covers 182 publications, which are presented alphabetically by author with a brief annotation describing how it relates to the above criteria. The articles are also indexed by keyword. A brief summary highlights the documented literature and includes a series of issues for future discussion and research.International Relations/Trade,

Two-Dimensional Product Differentiation Under Duopoly: An Application to Product and Service Reliability

Under oligopoly firms are often observed to specialise their production, with some firms producing highly reliable output and offering good warranty deals, while others produce less reliable output and offer less attractive warranties, but charge a lower price. This paper develops an approach to product/service reliability which provides an alternative to the conventional analysis based on the characteristics approach. The model of this paper defines reliability as the objective probability of product failure, not as a characteristic of individual goods. Reliability, thus defined, is treated as a choice variable of the firm, and consumers’ preferences are partially endogenised. This approach to reliability is incorporated into a duopoly model which explains the phenomenon of specialisation described above. The model is applicable to the markets for consumer durables, some intermediate goods and some services.Reliability, duopoly.

Price Competition and Product Differentiation when Consumers Care for the Environment

Increasing environmental awareness may affect the pleasure of consuming a good for which an environmental friendly substitute is available. When deciding to buy differentiated products, a compromise is sometimes made between preferred characteristics of the good and its environmental properties. In this paper we investigate the market implication of product differentiation when customers are concerned about environmental aspects of the good. We use the spatial duopoly model to determine how environmental concern affects prices, product characteristics and market shares of the competing firms. Our analysis is based on a two-stage game where at the first stage each firm chooses the characteristic of its product. At the second stage each firm chooses its price. The unique equilibrium prices and market shares are affected by consumer awareness of the environment and by the higher costs for producing those goods. As for the Nash equilibria in the characteristics we find three equilibria depending on the parameter constellation. In order to find out whether the market functions in an optimal way we determined the choice of environmental characteristics by a welfare maximizing authority. The result of this analysis is that characteristics differ under private decision making and social one. It can be shown, however, that it is possible to choose environmental policy instruments in order to stimulate private firms to produce the social optimal qualities.Price competition, Quality competition, Environmental awareness, Environmentally friendly products

Technological Uncertainty and Cost-effectiveness of CO2 Emission Trading Schemes

This paper studies implications of uncertainty about the arrival date of a competitive CO2 backstop technology for the design of cost-effective CO2 emission trading schemes. For this purpose, we develop a dynamic general equilibrium model that captures empirical links between CO2 emissions associated with energy use, the rate and direction of technical change and the economy. We specify CO2 capture and storage (CCS) as the backstop technology whose competitiveness is anticipated or not. We find that the discounted welfare loss associated with the environmental target is lower if CCS is not anticipated and that CO2 shadow prices are then relatively high in the years before CCS is competitive. By not simply postponing the implementation of an emission reduction strategy until CCS is competitive, one relies more on economy-wide technical change and its welfare-enhancing technology externalities, thus allowing for a higher steady state. -- Dieses Papier untersucht die Implikationen von Unsicherheit bezüglich der Verfügbarkeit einer kompetitiven Technologie zur Kohlenstoffabscheidung und ?speicherung auf die Ausgestaltung kosteneffektiver CO2 Emissionshandelssysteme. Zu diesem Zweck wird ein dynamisches rechenbares allgemeines Gleichgewichtsmodell entwickelt, welches den empirischen Zusammenhang zwischen CO2 Emissionen, Rate und Richtung des technischen Wandels und wirtschaftlichen Aktivitäten berücksichtigt. Kohlenstoffabscheidung und ?speicherung wird als sogenannte Backstop-Technologie modelliert, deren Wirtschaftlichkeit antizipiert wird oder eben nicht. Die Simulationsergebnisse zeigen, dass die diskontierten Wohlfahrtsverluste der Klimapolitik niedriger sind, wenn die Technologie zur Kohlenstoffabscheidung und ?speicherung nicht antizipiert wird. In diesem Fall sind die Preise für CO2 Emissionszertifikate vor der unerwarteten Einführung der Backstop-Technologie relativ hoch. Es wird nicht einfach auf die Wirtschaftlichkeit der Kohlenstoffabscheidung und ? speicherung gewartet. Vielmehr wird ohne die Berücksichtigung von Kohlenstoffabscheidung und ? speicherung ein strikterer Politikpfad zur Erreichung der klimapolitischen Ziele implementiert, der die Internalisierung von technologischen Externalitäten und somit ein höheres Wohlfahrtsniveau ermöglicht. Die Umweltpolitik sollte gegeben der großen technologischen Unsicherheiten vorsichtig sein, Vermeidungsanstrengungen zu verschieben und auf eine Wunderwaffe zu Lösung des Klimaproblems im Energiesektor zu warten.CO2 capture and storage,computable general equilibrium modeling,directed technical change,emission trading,technological uncertainty

Labeling Policies in Food Markets: Private Incentives, Public Intervention, and Welfare Effects

This study considers the welfare impact of labeling policies of agricultural commodities with specific characteristics. Using a model of vertical differentiation, the effects on equilibrium and welfare levels are calculated. The introduction of the regulation and the emergence of two differentiated competitive markets leaves consumers and high-quality producers better off, while low-quality producers are worse off. With high costs and low quality differences, the total welfare impact of the regulation can be negative. Findings show that when high-quality producers can exercise market power, the regulation could be more easily accepted by producers, but it would have a negative effect on consumers.asymmetric information, food markets, labeling, market power, vertical differentiation, welfare effects, Agricultural and Food Policy,

Regional asymmetries in farm size

This paper explores how the initial farm size structure affects the exit decision of farms inducing free land capacities, and the allocation of the newly available land resources to the remaining farms in a particular region. We model an agricultural market where large and small firms first decide whether to leave the market or not; in case of continuing in production the farms compete for getting access to additional land resources in a Vickrey auction. We find that larger farms allocate more additional quantity than small farms; the latter are more likely to leave the market. An empirical illustration gives further support and reveals the relation between farm size structure, farm exits and growth of the large.asymmetries, land market, capacity allocation, Vickrey auction, Agricultural and Food Policy, Farm Management, Land Economics/Use, L11, L12, Q12,

Pollution-Reducing and Resource-Saving Technological Progress

In this paper we survey the theoretical literature on both pollution-reducing and resource-saving technological progress. The literature can be divided into two strands. One strand deals with microeconomic models which investigate incentives to adopt and to develop environmentally more friendly technologies for different policy tools and in different economic environments, such as market structure or timing and commitment structures. It turns out that, firstly, price based instruments such as emission taxes and tradable permits perform better than command and control policies, and secondly, that under competitive conditions ex ante end ex post optimal policies are equivalent. Under imperfect market conditions the policy conclusions are more subtile. The second strand of literature deals with both pollution-reducing and resource-saving technological progress within endogenous growth models. Most of these models are characterized by three market imperfections : market power for new (intermediate) products, positive R&D spillovers, and pollution. These imperfections can be mitigated by subsidies on intermediate products, subsidies on R&D effort, and a tax on emissions. Moreover, in most models there occurs a trade-off between the speed of growth and environmental quality. --pollution-reducing technological progress,resource-saving technological progress,environmental innovation,endogenous growth models

What's in a sign? Trademark law and enconomic theory.

The aim of this paper is to summarise the extant theory as it relates to the economics of trademark, and to give some suggestions for further research with reference to distinct streams ofliterature. The proposed line of study inevitably looks at the complex relationship between signs and economics. Trademark is a sign introduced to remedy a market failure. It facilitates purchase decisions by indicating the provenance of the goods, so that consumers can identify specific quality attributes deriving from their own, or others', past experience. Trademark holders, on their part, have an incentive to invest in quality because they will be able to reap the benefits in terms of reputation. In other words, trademark law becomes an economic device which, opportunely designed, can produce incentives for maximising market efficiency. This role must, of course, be recognised, as a vast body of literature has done, with its many positive economic consequences. Nevertheless, trademark appears to have additional economic effects that should be properly recognized: it can determine the promotion of market power and the emergence of rent-seeking behaviours. It gives birth to an idiosyncratic economics of signs where very strong protection tends to be assured, even though the welfare effects are as yet poorly understood. In this domain much remains to be done and the challenge to researchers is open.trademark, brand, economics and signs, asymmetric information, intellectual property rights, law and economics

Technology Adoption and Product Differentiation: Market-Level Effects

The focus of the microeconomic technology adoption literature has been on the adoption and diffusion of new innovations: who adopts, and when they adopt. Implicit in the literature is that consumers will embrace the product that results from the use of the new technology. If producers have reason to believe that adopting a new technology may lead consumers to perceive differentiated products, then the decision of whether or not to adopt needs to consider not only the effectiveness of the new technology but also the consumer response to it. That is, producers have to incorporate the impact of consumer-driven market-level effects into their technology choice decisions. In these situations, producers considering the adoption of a new agricultural biotechnology have a more complex learning problem than the technology adoption literature generally addresses, because producers need to consider the interaction of demand and supply effects from the adoption of any new technology. We motivate our analysis with the case of recombinant bovine somatotropin (rbST). In order to address some of these issues, we construct an analytical model of technology adoption that considers a market with differentiated goods. We develop a multi-period economic model of a representative farmer’s technology choice decision and integrate it into a market-level analysis that links the industry’s use of the technology to the structure of consumer demand. The focus of the microeconomic technology adoption literature has been on the adoption and diffusion of new innovations: who adopts, and when they adopt. Implicit in the literature is that consumers will embrace the product that results from the use of the new technology. If producers have reason to believe that adopting a new technology may lead consumers to perceive differentiated products, then the decision of whether or not to adopt needs to consider not only the effectiveness of the new technology but also the consumer response to it. That is, producers have to incorporate the impact of consumer-driven market-level effects into their technology choice decisions. In these situations, producers considering the adoption of a new agricultural biotechnology have a more complex learning problem than the technology adoption literature generally addresses, because producers need to consider the interaction of demand and supply effects from the adoption of any new technology. We motivate our analysis with the case of recombinant bovine somatotropin (rbST). In order to address some of these issues, we construct an analytical model of technology adoption that considers a market with differentiated goods. We develop a multi-period economic model of a representative farmer’s technology choice decision and integrate it into a market-level analysis that links the industry’s use of the technology to the structure of consumer demand.Marketing, Research and Development/Tech Change/Emerging Technologies,

Investment in Tourism Market: A Dynamic Model of Differentiated Oligopoly

We present a theoretical model in tourism economics, assuming that the market for tourism is an oligopoly with differentiated products. Destinations (i.e., countries, regions, sites or even firms) can invest in order to improve their carrying capacity that can be interpreted as the stock of physical, natural or cultural resources. Tourism flows yield current revenues, but they are usually detrimental for the cultural or natural resource stock over time. We find the solution of the dynamic model, and in particular we find the open-loop Nash equilibrium of the game among the destinations, under alternative settings, depending on whether the arrivals are exogenous or endogenous, and depending on whether the degree of differentiation among destinations is exogenous or endogenous. The model is rather general, and it can provide answers to different specific questions, like the choice between mass- vs. elite-tourism development strategies; the effect of the number of competing products upon profits; the optimal degree of product differentiation.Tourism, Differentiated games, Reservation price