Environmental Standards, Wage Incomes and the Location of Polluting Firms

The purpose of this paper is to study how the choice of environmental standards by governments is affected by the existence of wage incomes when firms' location is endogenous. In developed countries labor is unionized, which allows positive wage incomes to arise. Thus, each government has incentives to persuade firms to locate in its country since its social welfare depends on such incomes. But, as pollution damages the environment, each government will try to persuade polluting firms to locate in its country to obtain the wage incomes only when its valuation of environmental damage shows that it is low.environmental standards, firms' location, wage incomes

Relocation and Investment in R&D by Firms

The literature on foreign direct investment has analyzed firms’ location decisions when they invest in R&D to reduce production costs. Such firms may set up new plants in other developed countries while maintaining their domestic plants. In contrast, here we consider firms that close down their domestic operations and relocate to countries where wage costs are lower. Thus, we assume that firms may reduce their production costs by investing in R&D and also by moving their plants abroad. We show that these two mechanisms are complementary. When a firm relocates it invests more in R&D than when it does not change its location and, therefore, its production cost is lower in the first case. As a result, investment in R&D encourages firms to relocate. When firms do not invest in R&D on relocation, R&D discourages firms to relocate since the investment made by the firms that remain in the country partially offsets the labor cost advantage obtained by the firms that move their plants abroad.relocation, R&D, social welfare, imperfect competition, trade unions

International Trade and Strategic Privatization

The literature on mixed oligopoly does not consider that there is strategic interaction between governments when they decide whether to privatize their public firms. In order to analyze this quetion we consider two countries; In each country there is one public firm and n private firms. Firms have a constant marginal cost of production and the public firm is less efficient than the private firms. In this framework, we show that when the marginal cost of the public firms takes an intermediate value only one government privatizes its public firm and that government obtains a lower social welfare than the other.international trade, public firms, privatization

Mixed Duopoly, Merger and Multiproduct Firms

The literature on mergers has extensively analyzed the decision to merge by private firms but it has not considered the decision to merge by private and public firms. We assume that when a private firm and a public firm merge (or when one of them acquires the other), they sets up a multiproduct firm in which the government owns an exogenous percentage stake. In this framework, we show that the decision to merge by firms depends on the degree to which goods are substitutes and on the percentage of the shares owned by the government in the multiproduct firm.mixed duopoly, multiproduct firm, mergers

International Trade and Strategic Privatization

The literature on mixed oligopoly does not consider that there is strategic interaction between governments when they decide whether to privatize their public firms. In order to analyze this quetion we consider two countries; In each country there is one public firm and n private firms. Firms have a constant marginal cost of production and the public firm is less efficient than the private firms. In this framework, we show that when the marginal cost of the public firms takes an intermediate value only one government privatizes its public firm and that government obtains a lower social welfare than the other.Financial support from UPV (HB-8238/2000) and DGES (BEC 2000-0301) is gratefully acknowledged

Mixed Oligopoly and Environmental Policy

The literature on mixed oligopoly does not consider the role that the environmental policy of the government plays on the decision whether to privatize public firms. Assuming that there are one public firm and n private firms and that the government chooses an environmental standard we show that, when the number of private firms is low enough, the public firm is privatized if it is inefficient enough. When the number of private firms is high enough, the government always privatizes the public firm. We also show that the range of values of the parameters for which the government privatizes the public firm is greater than when environmental policy is not considered.Financial support from UPV (HB-8238/2000) and DGES (BEC 2000-0301) is gratefully acknowledged

Partial privatization in an international mixed oligopoly under product differentiation

[EN]We consider an international mixed market that comprises two countries, each of which owns one public firm and one private firm. As a benchmark case, we consider a single country that owns all four firms. In both cases, governments decide whether to partially privatize their public firms or not. Under an international mixed market privatization decisions are driven by strategic reasons, while in the benchmark case they are driven by efficiency reasons. We find that whether governments privatize more or less in the former case than in the latter depends on the type of goods produced by the firms (homogeneous, independent in demand, complements and substitutes). We also find that social welfare may be greater under an international mixed market than in the benchmark case. Finally, under an international mixed market there is more privatization when each public firm produces the same good as the domestic private firm than when they produce different goodsFinancial support from Ministerio de Ciencia y Tecnología (ECO2015-66803-P) and Grupos de Investigación UPV/EHU (GIU17/051) is gratefully acknowledge

Environmental Standards, Wage Incomes and the Location of Polluting Firms

The purpose of this paper is to study how the choice of environmental standards by governments is affected by the existence of wage incomes when firms' location is endogenous. In developed countries labor is unionized, which allows positive wage incomes to arise. Thus, each government has incentives to persuade firms to locate in its country since its social welfare depends on such incomes. But, as pollution damages the environment, each government will try to persuade polluting firms to locate in its country to obtain the wage incomes only when its valuation of environmental damage shows that it is low.Financial support from DGES (PB97-0603) and UPV (035.321-HB159/98) is gratefully acknowledged

Privatisation and Vertical Integration under a Mixed Duopoly

[EN] This paper analyses the privatisation of public firms when private firms may be vertically in- tegrated with their suppliers. We consider a mixed duopoly with a vertically integrated public firm. The private firm bargains the price of the input with its supplier if they are not vertically integrated. We find that for a given bargaining power of the private firm, it vertically integrates with its supplier if goods are weak substitutes. We also find that there is less vertical integration in the mixed duopoly than in the private duopoly. Finally, in general, the public firm is privatised when goods are close substitutes and the bargaining power of the private firm is low enough.Este trabajo de investigación ha sido financiado por el Ministerio de Ciencia y Tecnologia (ECO2015-66803-P) y por Grupos de Investigación UPV/EHU (GIU17/051)

Mixed Duopoly, Merger and Multiproduct Firms

The literature on mergers has extensively analyzed the decision to merge by private firms but it has not considered the decision to merge by private and public firms. We assume that when a private firm and a public firm merge (or when one of them acquires the other), they sets up a multiproduct firm in which the government owns an exogenous percentage stake. In this framework, we show that the decision to merge by firms depends on the degree to which goods are substitutes and on the percentage of the shares owned by the government in the multiproduct firm.Financial support from UPV (035.321-HB159/98) and DGES (PB97-0603) is gratefully acknowledged