80,071 research outputs found
Multi-unit Bilateral Trade
We characterise the set of dominant strategy incentive compatible (DSIC),
strongly budget balanced (SBB), and ex-post individually rational (IR)
mechanisms for the multi-unit bilateral trade setting. In such a setting there
is a single buyer and a single seller who holds a finite number k of identical
items. The mechanism has to decide how many units of the item are transferred
from the seller to the buyer and how much money is transferred from the buyer
to the seller. We consider two classes of valuation functions for the buyer and
seller: Valuations that are increasing in the number of units in possession,
and the more specific class of valuations that are increasing and submodular.
Furthermore, we present some approximation results about the performance of
certain such mechanisms, in terms of social welfare: For increasing submodular
valuation functions, we show the existence of a deterministic 2-approximation
mechanism and a randomised e/(1-e) approximation mechanism, matching the best
known bounds for the single-item setting
An evaluation of Nigeria-Chad trade and security relations, 1988-2009
The contemporary world is such that nations cannot do without one another. This is because some nations are connected by historical, cultural, social, economic, scientific and other forms of strategic interests. Nigeria and Chad over the years have a history of inter-state relations that pre-dates the coming of colonial masters. However, at the end of colonial rule, both states engaged in multi-dimensional forms of bilateral relations. This study, which adopts mixed method of research focuses on Nigeria-Chad economic relations. It reveals the forms of trade agreement between both states. The study highlights formal and informal nature of the trade amongst the two states and found that their history of diplomatic relations has promoted the national interest as well as the management of strategic over-lapping trade demands in both countries. This study used regression analysis and applied unit root, co-integration, chow test, stability test as well as Phillips-Perron (PP) and Augmented Dickey-Fuller (ADF) to find-out that there is strong positive significant relationship between Nigeria-Chad trade and economic diplomacy within the period of 1970-2018 as well as reasonable stability in Nigerian trade and security relations with Chad in the presence of Boko Haram menace. The study recommends increased bilateral trade, border security as well as intelligence sharing on the dynamics of security threats to the relations of both states
Trade and synchronization in a multi-country economy
Substantial evidence suggests that countries with stronger trade linkages have more synchro-
nized business cycles. The standard international business cycle framework cannot replicate this
finding, uncovering the trade-comovement puzzle. We show that under certain macro-level conditions but irrespective of the micro-level assumptions concerning trade the puzzle arises because
trade fails to substantially increase the correlation between each country's import penetration
ratio and the trade partner's technology shock. Within a large class of trade models, there
are three channels through which bilateral trade may increase business cycle synchronization.
Specifically, increased bilateral trade may (i) raise the correlation between each country's tech-
nology shocks, (ii) raise the correlation between each country's share of expenditure on domestic
goods, and (iii) raise the response of the domestic import penetration ratio to foreign technology
shocks. Empirical evidence strongly supports the first and second channels. We show that the
trade-comovement puzzle can be resolved if productivity shocks are more correlated between
country-pairs that trade more
Per capita income and the extensive margin of bilateral trade
This paper quantitatively explores the role of the demand structure in explaining the
relationship between an importer's per capita income and the extensive margin of bilateral trade. The underlying mechanism is based on the fact that agents expand the set of goods they consume with income. This in turn affects the structure of a country's import demand and therewith the extensive margin of trade. We formalize this intuition by incorporating preferences that allow for binding non-negativity constraints into an otherwise standard Ricardian multi-country model. We quantify the model using the data on US consumer expenditures and aggregate values of bilateral trade flows and find that the behavior of the model's extensive margin of bilateral trade is consistent with the data (as opposed to the standard model). Two popular counterfactual experiments - lower trade costs and the rise of China and India - demonstrate that the mechanism outlined in this paper is indeed quantitatively important
A dominant strategy, double clock auction with estimation-based tatonnement
The price mechanism is fundamental to economics but difficult to reconcile with incentive compatibility and individual rationality. We introduce a double clock auction for a homogeneous good market with multidimensional private information and multiunit traders that is deficitâfree, ex post individually rational, constrained efficient, and makes sincere bidding a dominant strategy equilibrium. Under a weak dependence and an identifiability condition, our double clock auction is also asymptotically efficient. Asymptotic efficiency is achieved by estimating demand and supply using information from the bids of traders that have dropped out and following a tĂątonnement process that adjusts the clock prices based on the estimates
The buyer margins of firms' exports
We use highly disaggregated firm-level export data from Costa Rica, Ecuador, and Uruguay over the period 2005-2008 to provide a precise characterization of firms' export margins, across products, destination countries, and crucially customers. We show that a firm's number of buyers and the distribution of sales across them systematically vary with the characteristics of its destination markets. While most firms serve only very few buyers abroad, the number of buyers and the skewness of sales across them increases with the size and the accessibility of destinations. We develop a simple model of selection with heterogeneous buyers and sellers consistent with these findings in which tougher competition induces a better alignment between consumers' ideal variants and firms' core competencies. This generates an additional channel through which tougher competition leads to higher productivity and higher welfare and hints at an additional source of gains from trade as long as freer trade fosters competition
Regional integration and economic development: An empirical approach
This paper contributes to the empirical literature by providing a quantitative measurement of the influence of regional trade integration on productivity. For this purpose we address the link between trade and productivity thanks to knowledge spillovers in a multi-country model. The interdependence that connects countries in an international web promotes exchanges of goods, services, people, capital and hence ideas, knowledge, innovation, and technology. Economic integration encourages thus both new ideas and their diffusion. We observe that a countryâs productivity depends on its own R&D efforts as well as the R&D efforts of its trading partners. These R&D spillovers can then spread across countries and sectors. Thanks to the transfer of technology allowed by bilateral trade and investment, regional trade integration has a positive impact on long-term growth
The Promotion of Regional Economic Integration in the EUâs Neighbourhood: CEFTA 2006 and the Agadir Agreement. Bruges Regional Integration & Global Governance Paper 5/2009
Regional integration scores alluringly high on the hit list of the most promising cures for the worldâs major problems. Undoubtedly, the European Union has considerable experience in developing a sophisticated regional integration scheme â but does it possess the âmagic formulaâ for fostering integration in other parts of the world? This paper asks how and why the European Union promotes regional economic integration in its neighbourhood and to what extent it is successful. We argue that as a ânormative powerâ the EU aims both at exporting its norms and values and at increasing its security by stabilising its neighbourhood. We assess the EUâs success in promoting the regional trade agreements located in the Western Balkans (CEFTA 2006) and the Mediterranean (Agadir Agreement). The findings of these two case studies show that the EU pursues different political objectives with its support on a general political level as well as through concrete financial and technical assistance programmes. Although the existence of an EU membership perspective has an influence, the Union is not necessarily more successful in promoting regional economic integration among (potential) candidate countries
Fixed Price Approximability of the Optimal Gain From Trade
Bilateral trade is a fundamental economic scenario comprising a strategically
acting buyer and seller, each holding valuations for the item, drawn from
publicly known distributions. A mechanism is supposed to facilitate trade
between these agents, if such trade is beneficial. It was recently shown that
the only mechanisms that are simultaneously DSIC, SBB, and ex-post IR, are
fixed price mechanisms, i.e., mechanisms that are parametrised by a price p,
and trade occurs if and only if the valuation of the buyer is at least p and
the valuation of the seller is at most p. The gain from trade is the increase
in welfare that results from applying a mechanism; here we study the gain from
trade achievable by fixed price mechanisms. We explore this question for both
the bilateral trade setting, and a double auction setting where there are
multiple buyers and sellers. We first identify a fixed price mechanism that
achieves a gain from trade of at least 2/r times the optimum, where r is the
probability that the seller's valuation does not exceed the buyer's valuation.
This extends a previous result by McAfee. Subsequently, we improve this
approximation factor in an asymptotic sense, by showing that a more
sophisticated rule for setting the fixed price results in an expected gain from
trade within a factor O(log(1/r)) of the optimal gain from trade. This is
asymptotically the best approximation factor possible. Lastly, we extend our
study of fixed price mechanisms to the double auction setting defined by a set
of multiple i.i.d. unit demand buyers, and i.i.d. unit supply sellers. We
present a fixed price mechanism that achieves a gain from trade that achieves
for all epsilon > 0 a gain from trade of at least (1-epsilon) times the
expected optimal gain from trade with probability 1 - 2/e^{#T epsilon^2 /2},
where #T is the expected number of trades resulting from the double auction
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