The principle of mutual recognition - A source of divergence ?

Governments set numerous norms to protect consumers. Two countries may achieve the same level of protection of their consumers through different specifications. The adaptation costs induced by these differences create barriers to trade. The principle of mutual recognition addresses the problem by ensuring that products lawfully manufactured in one country are acceptable without adaptation in another country. We show that by shifting the transaction costs of adapting to several norms from firms to consumers the principle of mutual recognition creates disparities across countries and is (more) beneficial to larger countries.technical barriers to trade, mutual recognition, economic geography, home market effect

Product Differentiation in Successive Vertical Oligopolies

This is a successive oligopoly model with two brands. Each downstream firm chooses one brand to sell on a final market. The upstream firms specialize in the production of one input specifically designed for the production of one brand, but they also produce the input for the other brand at an extra cost. We show that when more downstream firms choose one brand, more upstream firms will specialize in the input specific to that brand, and vice versa. Hence, multiple equilibria are possible and the softening effect of brand differentiation on competition might not be strong enough to induce maximal differentiation. The existence of equilibria and their welfare performance are also examined.Product differentiation, Vertical relationships, Oligopoly

On Monopolistic Competition and Optimal Product Diversity: a Comment on Cost Structure and Workers' Rents

In the Dixit-Stiglitz model of monopolistic competition, entry of firms is socially too small. Other authors have shown that excess entry is also a possibility with other preferences for diversity. We show that the cost structure and workers's rents can also explain excess entry.monopolistic competition; product diversity

The Distribution of Earnings under Monopsonistic/polistic Competition

Recent empirical contributions in labor economics suggest that individual firms face upward sloping labor supplies. We rationalize this by assuming that idiosyncratic non-pecuniary conditions interact with money wages in workers’ decisions to work for specific firms. Likewise, firms supply differentiated goods in response to differences in consumer tastes. Hence, firms are price-makers and wage-setters. By combining monopolistic and monopsonistic competition, our setting encapsulates general equilibrium interactions between the two markets. The equilibrium involves double exploitation of labor. Compared to the competitive outcome, the high-productive workers are overpaid under free entry, whereas the low-productive workers are underpaid. In the same vein, capital-owners receive a premium, whereas workers are exploited.wage dispersion, worker heterogeneity, monopsonistic competition, monopolistic competition, labor exploitation

The Impact of Labor Markets on Emergence and Persistence of Regional Asymmetries

This paper investigates the impact of labor markets and economies of agglomeration on firms location. We show that the existence of a lower bound on wage (e.g. a minimum wage or a reservation wage) introduces asymmetric location of firms. Moreover, changes in that lower bound or in global product demand may induce irreversible changes in location equilibria. Asymmetries in firms location may thus emerge and persist

Negative Intra-Group Externalities in Two-Sided Markets

Two types of agents interact on a pre-existing free platform. Agents value positively the presence of agents of the other type but may value negatively the presence of agents of their own type. We ask whether a new platform can find fees and subsidies so as to divert agents from the existing platform and make a profit. We show that this might be impossible if intra-group negative externalities are sufficiently (but not too) strong with respect to positive inter-group externalities.two-sided markets, naked exclusion, divide and conquer

Taxation and Labor Markets

We exploit the common features of models such as union-firm wage bargaining, search and efficiency wage models to develop a framework that can be used for analyzing the effects of any budget-neutral tax reform on employment in these models. We show that taxes paid by workers are not equivalent to taxes paid by firms when taxes are non linear. Moreover, increasing progressivity is good for employment in these models.

Focus 18 - avril 2016

Dans son communiqué de presse du 9 avril 2016 relatif au contrôle budgétaire, le gouvernement belge annonce, parmi les réformes structurelles, la taxation de ce qu’il est convenu d’appeler l’économie collaborative, dont les figures emblématiques sont des plateformes numériques comme Airbnb, Uber ou Listminut. Le communiqué n’indique pas la manière dont cette taxation serait réalisée mais selon Le Soir et Trends, le cabinet du Ministre De Croo envisagerait d’opérer des prélèvements à la source sur les revenus que les prestataires (les hôtes d’Airbnb, les conducteurs d’Uber, …) gagnent sur ces plateformes

Home market effect versus multinationals

In this paper, based on the cyclic scheduling formulation of Schilling and Pantelides [22], we propose a continuous time mixed integer linear programming (MILP) formulation for the cyclic scheduling of a mixed plant, i.e. a plant composed of batch and continuous tasks. The cycle duration is a variable of the model and the objective is to maximize productivity. By using strengthening techniques and the analysis of small polytopes related to the problem formulation, we strengthen the initial formulation by tightening some initial constraints and by adding valid inequalities. We show that this strengthened formulation is able to solve moderate size problems quicker than the initial one. However, for real size cases, it remains difficult to obtain the optimal solution of the scheduling problem quickly. Therefore, we introduce MILP-based heuristic methods in order to solve these larger instances, and show that they can provide quite good feasible solutions quickly