Business Profitability and Social Profitability: Evaluating Industries with Externalities, The Case Casinos.

Casino gambling is a social issue, because in addition to the direct benefits to those who own and use casinos, positive and negative externalities are reaped and borne by those who do not gamble. To correctly assess the total economic impact of casinos, one must distinguish between business profitability and social profitability. This paper provides the most comprehensive framework for addressing the theoretical cost–benefit issues of casinos by grounding cost–benefit analysis on household utility. It also discusses the current state of knowledge about the estimates of both the positive and negative externalities generated by casinos. Lastly, it corrects many prevalent errors in the debate over the economics of casino gambling.casino, crime, gambling, social costs, externality

Asymmetric Intellectual Property Rights Protection and North-South Welfare

We construct a model of dynamic endogenous product innovation and international trade, using it to calculate the welfare effects of lower intellectual property rights (IPR) protection in the non-innovating South than in the innovating North. We find that it is generally in the North’s interest to protect its innovating sector by an import embargo on IPR-offending goods from abroad. We explain the paradoxical outcome where the North gains from weaker IPR enforcement in the South through a decomposition of the dynamic welfare formula. Key features include the ability of lower Southern IPR protection to spur innovation of Northern goods and to make available greater resources for Northern production of current consumption goods. Maintaining Northern IPR standards can be in the South’s interests even though the South would favor lower uniform levels of IPR protection.Intellectual Property Rights; Innovation; Imitation; North; South; Welfare

Rules of Origin and Gains from Trade

This paper identifies the most restrictive limit that rules of origin can enforce and still continue to guarantee gains from trade area formation in general settings. Many commonly used rules of origin exceed this condition in practise. Second, free trade areas generally involve unharmonized tariffs requiring rules of origin that make standard analyses difficult or inapplicable. We incorporate the identified welfare-supporting rules of origin into standard existence of equilibrium proofs and prove the existence of a free trade area equilibrium involving only within-FTA transfers that is at least as satisfactory for every consumer worldwide as an arbitrary original world for allocation. The analysis explains why hub-and-spoke extensions of free areas cannot guarantee gains from trade for all participants in general.Rules of origin, free trade areas, Walrasian equilibrium, welfare analysis

Asymmetric Intellectual Property Rights Protection and North-South Welfare

We construct a model of dynamic endogenous product innovation and international trade, using it to calculate the welfare effects of lower intellectual property rights (IPR) protection in the non-innovating South than in the innovating North. We find that it is generally in the North’s interest to protect its innovating sector by an import embargo on IPR-offending goods from abroad. We explain the paradoxical outcome where the North gains from weaker IPR enforcement in the South through a decomposition of the dynamic welfare formula. Key features include the ability of lower Southern IPR protection to spur innovation of Northern goods and to make available greater resources for Northern production of current consumption goods. Maintaining Northern IPR standards can be in the South’s interests even though the South would favor lower uniform levels of IPR protection

Stochastic Equilibrium and Exchange Rate Determination in a Small Open Economy with Risk Averse Optimizing Agents

This paper constructs a stochastic general equilibrium model of a small open economy consisting of risk averse optimizing agents. The stochastic processes describing the rate of monetary growth, government expenditure, private production, and the foreign price level are taken to be exogenous, determining all asset risks and returns, and the equilibrium stochastic processes describing the domestic inflation rate and the exchange rate. The model is used to examine a number of issues. These include: (i) the effects of the means and variances of policy shocks on the equilibrium; (ii) the determinants of the foreign exchange risk premium; (iii) the relationship between net export instability and economic growth.