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,

Trade liberalization in vertically related markets

This paper looks into the desirability of trade liberalization for manufacturers, retailers and consumers. The analysis compares the move from the autarky situation to either one of free trade that entails a change in the distribution system or not. We also examine whether the interests of manufacturers and retailers about the preferred distribution system coincide, provided trade opens. We find that market integration is beneficial to all agents only under certain conditions on the degree of market asymmetry and the degree of product differentiation. Interestingly, if integration entails a change in the distribution system, the conflict between manufacturers and retailers strengthens since only retailers prefer free trade when markets are not too asymmetric and when interbrand competition is sufficiently strong. Furthermore, consumers can be harmed by trade and, in a setting without exclusivities, one country may experience a welfare decrease. Finally, the analysis of the strategic choice concerning exclusivity clauses uncovers that retailers and manufacturers never agree about their preference for endogenous distribution systems.International competition, vertical relationships.

Co-ordination and Lock-in: Competition with Switching Costs and Network Effects

Switching costs and network effects bind customers to vendors if products are incompatible, locking customers or even markets in to early choices. Lock-in hinders customers from changing suppliers in response to (predictable or unpredictable) changes in effciency, and gives vendors lucrative ex post market power-over the same buyer in the case of switching costs (or brand loyalty), or over others with network effects. Firms compete ex ante for this ex post power, using penetration pricing, introductory offers, and price wars. Such "competition for the market" or "life-cycle competition" can adequately replace ordinary compatible competition, and can even be fiercer than compatible competition by weakening differentiation. More often, however, incompatible competition not only involves direct effciency losses but also softens competition and magnifies incumbency advantages. With network effects, established firms have little incentive to offer better deals when buyers’ and complementors’ expectations hinge on non-effciency factors (especially history such as past market shares), and although competition between incompatible networks is initially unstable and sensitive to competitive offers and random events, it later "tips" to monopoly, after which entry is hard, often even too hard given incompatibility. And while switching costs can encourage small-scale entry, they discourage sellers from raiding one another’s existing customers, and s also discourage more aggressive entry. Because of these competitive effects, even ineffcient incompatible competition is often more profitable than compatible competition, especially for dominant rms with installed-base or expectational advantages. Thus firms probably seek incompatibility too often. We therefore favor thoughtfully pro-compatibility public policy.

Production costs, scope economies, and multi-client outsourcing under quantity competition

Two game models are developed based on production costs and scope economies to investigate the widely observed multi-client outsourcing (MCO) phenomenon. Analytical results demonstrate that outsourcers’ high in-house production costs and the advantage of scope economies motivate firms to outsource collectively to an independent vendor. Under certain conditions, if both firms make their outsourcing decisions simultaneously, collective outsourcing is one of the two equilibria; if both firms make decisions sequentially, collective outsourcing becomes the unique equilibrium. Furthermore, the comparative statics of the critical degree of scope economies are examined for the occurrence of MCO with regard to diverse market parameters. Finally, it is proved that market prices decrease as the degree of scope economies increases when MCO occurs. This research helps explain some widely observed phenomena such as malls, supply chain cities, and the China price

Buyers’ Alliances for Bargaining Power

We provide a novel explanation as to why forming an alliance of buyers (or sellers) across separate markets can be advantageous when input prices are determined by bargaining. Our explanation helps to understand the prevalence of buyer cooperatives among small and medium sized firms. ZUSAMMENFASSUNG - (Verhandlungsmacht durch Käuferkooperationen) Dieses Papier entwickelt eine neue Erklärung dafür, warum Zusammenschlüsse zwischen Käufern (oder Verkäufern), die in unterschiedlichen Märkten aktiv sind, deren Verhandlungsmacht stärken können. Unser Ansatz kann unter anderem erklären, warum sich kleinere und mittlere Unternehmen oft zu Einkaufsgenossenschaften zusammenschließen.Nash bargaining solution, alternating-offer bargaining, bargaining power, buyer power, cooperatives, input markets.

Multi-product cost and value stream modelling in support of business process analysis

To remain competitive, most Manufacturing Enterprises (MEs) need cost effective and responsive business processes with capability to realise multiple value streams specified by changes in customer needs. To achieve this, there is the need to provide reusable computational representations of organisational structures, processes, information, resources and related cost and value flows especially in enterprises realizing multiple products. Current best process mapping techniques do not suitably capture attributes of MEs and their systems and thus dynamics associated with multi-product flows which impact on cost and value generation cannot be effectively modelled and used as basis for decision making. Therefore, this study has developed an integrated multiproduct dynamic cost and value stream modelling technique with the embedded capability of capturing aspects of dynamics associated with multiple product realization in MEs. The integrated multiproduct dynamic cost and value stream modelling technique rests on well experimented technologies in the domains of process mapping, enterprise modelling, system dynamics and discrete event simulation modelling. The applicability of the modelling technique was tested in four case study scenarios. The results generated out of the application of the modelling technique in solving key problems in case study companies, showed that the derived technique offers better solutions in designing, analysing, estimating cost and values and improving processes required for the realization of multiple products in MEs, when compared with current lean based value stream mapping techniques. Also the developed technique provides new modelling constructs which best describe process entities, variables and business indicators in support of enterprise systems design and business process (re) engineering. In addition to these benefits, an enriched approach for translating qualitative causal loop models into quantitative simulation models for parametric analysis of the impact of dynamic entities on processes has been introduced. Further work related to this research will include the extension of the technique to capture relevant strategic and tactical processes for in-depth analysis and improvements. Also further research related to the application of the dynamic producer unit concept in the design of MEs will be required

Secret contracting in multilateral relations

We develop a general, tractable framework of multilateral vertical contracting, which places no restriction on tariffs and fully accounts for their impact on downstream competition. Equilibrium tariffs are cost-based and replicate the outcome of a multi-brand oligopoly, a finding in line with the analysis of a recent merger. We provide a micro-foundation for this framework, before analyzing the effect of RPM and price parity provisions, and of resale vs. agency business models. Finally, we extend the framework to endogenize the distribution network; we also consider mergers and show that their impact on the distribution network can dominate price effects

Notes on the Determinants of Innovation: A Multi-Perspective Analysis

The study of innovation and technological change is an increasing field of economic enquire because innovation can be considered a major engine of growth. This paper is concerned with the determinants of innovation and technological change. Different theoretical approaches present in the literature are systematically considered. The aim of this work is to offer an overview of contributions emerging from different perspectives trying to place them in their proper theoretical framework. The paper will be divided in different subsections in which each determinant is individually treated through the presentation of the most relevant results achieved by the literature on the specific issue. Policy considerations and hints for further research are also provided.Determinants of innovation, Innovation and knowledge, National systems of innovation, Intellectual property rights, Technology policy

Buyers' alliances for bargaining power

"Dieses Papier entwickelt eine neue Erklärung dafür, warum Zusammenschlüsse zwischen Käufern (oder Verkäufern), die in unterschiedlichen Märkten aktiv sind, deren Verhandlungsmacht stärken können. Unser Ansatz kann unter anderem erklären, warum sich kleinere und mittlere Unternehmen oft zu Einkaufsgenossenschaften zusammenschließen." (Autorenreferat)"We provide a novel explanation as to why forming an alliance of buyers (or sellers) across separate markets can be advantageous when input prices are determined by bargaining. Our explanation helps to understand the prevalence of buyer cooperatives among small and medium sized firms." (author's abstract