Trade policy and leapfrogging.

The recent extensive study of vertical product differentiation models has allowed for the analysis of international trade issues in the presence of country asymmetries in terms of product qualities, technology, cost, market size and income. In the presence of such asymmetries, national industries will either be market leaders or lagging behind in the international market place in terms of their product qualities. The resulting asymmetry in profits creates powerful incentives for lagging industries as well as their national Governments to reverse this situation to their advantage, i.e., to induce "leapfrogging" in terms of product qualities. This paper presents an overview of existing research on leapfrogging as well as several new results and questions.Product qualities; International trade; Trade policy;

Quantity restrictions and endogeneous quality choice

In this paper we show that in an imperfectly competitive market the imposition of quantity restrictions at, or less than, the free trade equilibrium has important strategic effects on the choice of quality. In a vertical product differentiation model where foreign and domestic firms compete in quantities, both firms respond by lowering their qualities for a restriction at, or close enough, to the free trade level. If the restriction is substantially smaller than the free trade equilibrium an increase in average quality is observed only when the foreign firm produces the low quality. The change in quality depends not only on whether the recipient is a high, or low, quality foreign firm. It also depends on how restrictive the constraints are

Trade policies, time consistency, quality reversals and exit in vertically integrated industries.

The impact of strategic trade policies, such as import tariffs and domestic output subsidies, is studied in a vertically differentiated duopoly. Firms first choose quality and then compete in quantities or prices in the home market. If the government is unable to commit to a policy the domestic firm then chooses its quality strategically in order to alter the market structure in its favor. Time consistent subsidies are always positive and result in a domestic monopoly as the foreign firm exits the market. Time consistent tariffs are also positive and ensure that the domestic firm always produces the high quality good. Commitment to a subsidy results in greater domestic welfare than under non-commital. Except for the case when, under price competition and the domestic firm producing the low quality good under free trade, non-commital under tariffs by the domestic government is welfare improving.Vertical differentiation; Time consistent policies; Commitment; Import tariffs; Output subsidies; Quality reversals; Exit;

Trade policy and leapfrogging

The recent extensive study of vertical product differentiation models has allowed for the analysis of international trade issues in the presence of country asymmetries in terms of product qualities, technology, cost, market size and income. In the presence of such asymmetries, national industries will either be market leaders or lagging behind in the international market place in terms of their product qualities. The resulting asymmetry in profits creates powerful incentives for lagging industries as well as their national Governments to reverse this situation to their advantage, i.e., to induce "leapfrogging" in terms of product qualities. This paper presents an overview of existing research on leapfrogging as well as several new results and questions

Regulación de las telecomunicaciones en la Unión Europea: Competencia en servicios y en redes

los cambios tecnológicos han cambiado la naturaleza de la competencia en el sector de las telecomunicaciones. Si antes se defendía la existencia de monopolios naturales ahora la posibilidad de instalar infraestructuras de telecomunicación alternativas a costes no prohibitivos hace que la liberalización del sector de infraestructuras sea un paso indispensable para la plena liberalización del sector y la consecución de las ganancias esperadas de una mayor competencia. La Comisión de la Unión Europea (UE) ha introducido cambios regulatorios en este sector basando el proceso de liberalización en dos fases distintas: en primer lugar se liberalizó el sector de servicios (con alguna excepcion importante) y ahora, en segundo lugar se plantea la liberalización del mercado de infraestructuras (o capacidades). En este artículo defendemos la interrelacion básica entre ambos procesos y la necesidad de llevar a cabo esta segunda fase para que el proceso surta beneficios. La experiencia en distintos paises de la OCDE demuestra que aquellos países que antes liberalizaron el sector de infraestructuras antes han podido disfrutar de un mayor numero de servicios, precios y costes menores de transmisión y de un desarrollo más completo en el sector de las telecomunicaciones

Régimen institucional del mercado spot y del mercado de futuros en distintos países

En este trabajo se describen las normas que rigen el funcionamiento del mercado de futuros para la electricidad en distintos países, en especial el Reino Unido, y se estudian las posibles interrelaciones en la organización y regulación entre este mercado y el spot

Relación entre los mercados spot y de futuros en un contexto oligopolístico

Existe una reciente literatura sobre la relación entre los mercados spot y de futuros. En ella se encuentra un efecto pro-competitivo de estos últimos. En este trabajo estudiamos la robustez de este resultado y de otros referidos a la transparencia de estos mercados. Usando el mismo modelo que en el resto de la literatura, pero variando algún supuesto implícito, establecemos conclusiones muy distintas

Tariffs, quality reversals and exit in vertically differentiated industries

In a vertically differentiated industry a domestic and a foreign firm first choose the quality of their goods and then compete in quantities, or prices, in the home market. We investigate the cases in which a tariff is chosen before, or after, the firms’ quality decision. These cases are referred to as the ex-ante and the ex-post game, respectively. Optimal ex-post tariffs are positive and ensure that the domestic firm always produces the high quality good. The optimal ex-ante tariff is prohibitive and welfare under domestic monopoly is lower than under ex-post tariffs, unless firms compete in prices and the domestic firm is high quality.The authors would like to thank Jim Markusen and the participants at the meetings in Aix-en-Provence, The International Conference in Industrial Organization (Carlos III), Bellatera (Barcelona), ASSET (Alicante), ETSG (Erasmus) and seminars at Bologna and Vigo universities. The paper was written when Herguera and Petrakis were at Carlos III. The authors would like to thank an anonymous referee, Berthold Herrendorf, and especially the Editor, Jonathan Eaton, for detailed comments that led to a complete rewrite of the paper. Kujal acknowledges support from grants DGESIC [PB98/0024 and CAM 06/0058/2001. Herguera acknowledges support from grant [PB93-236. All remaining errors are our ownPublicad

Regulación de precios de interconexion

El presente trabajo revisa las diversas reglas propuestas en la literatura para la regulacion de los precios de interconexion cuando la empresa propietaria de una red compite con otras empresas en la provision de servicios finales que requieren la utilizacion de dicha red

Non-credible policies and leap-frogging in a vertically differentiated industry

In a vertically differentiated duopoly, where firms first choose quality and then compete in quantities, it is shown that optimal time consistent subsidies and tariffs are always positive. Time consistent subsidies result in domestic monopolies as the foreign firm exits the market. Domestic welfare is greater if the government can precommitment to a subsidy. Time consistent tariffs ensure that the domestic firm always produces the high quality good. Optimal tariffs are always higher under precommitment. Contrary to subsidies, under tariffs non-commital on the part of the domestic government is welfare improving, and domestic welfare is always greater than under both free trade and subsidies