An Assessment of the Economic Effects of COFCO

International Relations/Trade,

The Economic Effects of State Trading Enterprises: Market Access and Market Failure

International Relations/Trade,

IMPERFECT COMPETITION, TRADE POLICY AND PROCESSED AGRICULTURAL PRODUCTS: SOME INITIAL RESULTS

This paper applies some recent developments in international trade theory to processed agricultural product markets. Theoretical results are derived showing that when such markets are characterized by imperfect competition, there may be a case for government intervention in the form of subsidies and tariffs. In order to provide some empirical background, a simulation model is used to assess the level of an optimal tariff on U.S. cheese imports. The implications of this analysis for the liberalization of agricultural trade are also considered.Agricultural and Food Policy, International Relations/Trade,

Climate Policy, Carbon Leakage and Competitiveness: How Might Border Tax Adjustments Help?

In this paper, analysis is presented relating to the impact of border tax adjustments for climate policy on the international competitiveness of energy-intensive industries, and the related problem of carbon leakage. While many of the economic and legal issues are not particularly new, climate policy does present some possible twists to the analysis of border tax adjustments when vertically-related markets can be characterized as a successive oligopoly. Specifically, an appropriate border tax adjustment will depend on the incidence of a domestic carbon tax, the nature of competition in upstream and downstream sectors, as well as the basis for assessing the trade neutrality of any border tax adjustment. If trade neutrality is defined in terms of market volume, even though carbon leakage is reduced, domestic firm competitiveness cannot be maintained. This compares to defining trade neutrality in terms of market share, which results in domestic competitiveness being maintained and global carbon emissions being reduced.climate policy, carbon leakage, border tax adjustments, imperfect competition, Environmental Economics and Policy, International Relations/Trade, H87, Q38,

Market Power and Relative Price Adjustment: Evidence from the UK

Empirical studies of price transmission often suggest that imperfect pass-through may be due to market power exerted by food retailers. However, these econometric studies essentially lack any formal basis for tying the role of market power with data comprising of retail and producer prices only. We show that if market power has an effect on the farm-retail margin, this determines the specification of the cointegrating relationship. To emphasise the relevance of the tests, we focus on results relating the UK beef sector and show that market power is likely to have played a role in determining the retail-farm price margin.price adjustment, market power, Demand and Price Analysis, Q11, L13,

THE NON-NEUTRALITY OF WTO BORDER TAX ADJUSTMENTS FOR ENVIRONMENTAL EXCISE TAXES UNDER IMPERFECT COMPETITION

Border tax adjustments for environmental taxes should leave imports of final goods unchanged. If intermediate and final goods markets are imperfectly competitive though, non-neutrality can result. Under Cournot behavior, an import tax equal to the environmental tax is too high, and under Bertrand, an import subsidy is the appropriate policy.Environmental Economics and Policy, International Relations/Trade,

CORRUPTION AROUND THE WORLD: EVIDENCE FROM A STRUCTURAL MODEL

The causes and consequences of corruption have attracted much attention in recent years by both academics and policy makers. Central in the discussion on the impact of corruption are perception-based indices. While informative, these indices are ordinal in nature and hence provide no indication of how much economic loss is attributed to corruption. Arguably, this shortcoming is rooted in the lack of a structural model. This is the issue addressed in this paper. By treating corruption as a latent variable that is directly related to its underlying causes, a cardinal index of corruption is derived for approximately 100 countries. This allows us to compute a measure of the losses due to corruption as a percentage of GDP per capita.Corruption, Latent Variables, Economic Development, Rule of Law

How do Institutions Affect Corruption and the Shadow Economy?

This paper analyzes a simple model that captures the relationship between institutional quality, the shadow economy and corruption. It shows that an improvement in institutional quality reduces the shadow economy and affects the corruption market. The exact relationship between corruption and institutional quality is, however, ambiguous and depends on the relative effectiveness of the institutional quality in the shadow and corruption markets. The predictions of the model are empirically tested - by means of Structural Equation Modelling that treats the shadow economy and the corruption market as latent variables - using data from OECD countries. The results show that an improvement in institutional quality reduces the shadow economy directly and corruption both directly and indirectly (through its effect on the shadow market).Corruption, Shadow Economies, OECD countries, Latent Variables, Structural Equation Modelling

How Do Institutions Affect Corruption and the Shadow Economy

This paper analyzes a simple model that captures the relationship between institutional quality, the shadow economy and corruption. It shows that an improvement in institutional quality reduces the shadow economy and a?ects the corruption market. The exact relationship between corruption and institutional quality is, however, ambiguous and depends on the relative e?ectiveness of the institutional quality in the shadow and corruption markets. The predictions of the model are empirically tested—by means of Structural Equation Modelling that treats the shadow economy and the corruption market as latent variables—using data from OECD countries. The results show that an improvement in institutional quality reduces the shadow economy directly and corruption both directly and indirectly (through its e?ect on the shadow market).Corruption; Shadow Economies; OECD countries; Latent Variables; Structural Equation Modelling.

International Taxation and FDI Strategies: Evidence From US Cross-Border Acquisitions

While there is a well-established body of empirical research documenting the negative effect of taxation on foreign direct investment (FDI), there is scant evidence on the extent to which international tax considerations (double taxation, international tax relief stipulated in bilateral tax treaties and the effect of withholding taxes) affect the role of taxation for FDI, and how tax issues differ according to the investment strategies—‘horizontal’ and ‘vertical’—pursued by %multinational firms. This paper addresses these issues. Using data on US acquisitions over the period 1995-2005 in 18 OECD countries, it is shown that international tax relief plays a critical role in determining the impact of taxation. Regardless of the type of investment strategy, the significantly negative effect of corporate taxes disappears when accounting for the tax credits stipulated in bilateral tax treaties. It is also shown that there is considerable heterogeneity of the impact of sales taxes across investment strategies. High administrative burden to comply with taxation always reduces a country’s appeal as target for FDI.Corporate taxation; Cross-Border acquisitions; FDI strategies; Tax treaties; Tax credits