Entrepreneurial culture, occupational choice and tax policy

This paper studies the influence of entrepreneurial culture among social groups in an economy. The cultural factor determines their occupational preferences. We develop a model in which a concentration factor has been used as a measure of business culture determining the occupational choice patterns of otherwise identical social groups. The occupational distribution of individuals from different groups is obtained by comparing expected utilities from employment and entrepreneurship. Based on the labor market outcomes the mean income and income variance of different groups is calculated. Individuals from groups with greater cultural traits display higher relative risk aversion with a high income variance compared to other groups. We propose a tax- subsidy policy and obtain conditions for maximizing social utility.Entrepreneurial culture, Self-employment, Risk aversion, Income variance, National Income, Tax-subsidy Policy

Global Climate Change, Technology Transfer and Trade with Complete Specialization

The paper develops a model in which a country with better technology for abatement of Green House Gas (GHG) emission (the North) commits to an international protocol to keep the global GHG emission within a specified limit while it helps the mitigation effort in the other country (the South) with unconditional transfer of abatement technology. It finds out in the autarkic (‘no trade’) equilibrium the technology transfer offer from the North is always accepted by the South. The North may offer either a partial or a complete technology transfer. If partial technology transfer is offered it finds out the determinants of the extent of technology transfer. Then it compares the autarkic equilibrium with equilibrium where trade with complete specialization occurs and finds out that trade limits the scope of technology transfer as an instrument for mitigation of global GHG emission.GHG Emission, Mitigation, Technology Transfer, Trade

R&D cooperation, asymmetric technological capabilities and rationale for technology parks

Starting from the premise that firms are distinct in terms of their capacity to create radical product innovations, the present paper attempts to explore how firms choose between different forms of R&D cooperation and their consequences for social welfare. It studies a duopolistic market, where firms have to choose between R&D competition, a cost sharing alliance, an information sharing alliance or an R&D cartel. The paper demonstrates that asymmetry has an impact on alliance choice and social welfare. With similar firms, the cost sharing alliance will be preferred to R&D competition or any other form of collaboration. With significant asymmetry no alliance may be formed. In terms of social welfare, any alliance is preferable to R&D competition and the R&D cartel is the best. Given this inherent contradiction between private preferences and optimal social choice, the paper provides a rationale for public investment in terms of science and technology parks to promote R&D cartels. --R&D competition,R&D cooperation,technology parks

Voluntary agreements and community development as CSR in innovation strategies

The present paper examines how an innovating firm decides between two forms of voluntary agreements (VA) in a context, where a non-governmental organization (NGO) rather than a regulator watches over citizens' interests. The innovation generates profit and consumer surplus as well as environmental damage. Corporate social responsibility (CSR) within the innovation process is considered in terms of a redistribution of profit towards community development, with or without additional abatement efforts via a VA. Bargaining between firm and NGO yields the amount allocated to community development. The model demonstrates that the firm's choice of VA hinges on the tradeoffs between appropriating the full innovation profit and paying a higher lump sum towards community development or sacrificing some of the innovation profit by lowering innovation effort, but gaining in terms of paying a lesser amount towards community development. CSR with abatement is unlikely in the case of radical innovations. There is also a clear divergence of interests between the firm, the NGO and the State for some parameter configurations, which are duly identified.Corporate social responsibility, voluntary agreements, community development, donations, innovation

Globalization and a welfare program for the marginalized

We study the economic relationship between globalization and inequality within a country. In a partial equilibrium it is shown even when the local government exclusively maximizes the welfare of the marginalized (unemployed) people, relative consumption inequality between employed and the marginalized always rises by intensified globalization. However in certain situations the relative income inequality may fall. --Globalization,inequality,marginalization,policy

Incidence of an outsourcing tax on intermediate inputs

The paper uses a Hecksher-Ohlin-Samuelson type general equilibrium framework to consider the incidence of an outsourcing tax on an economy in which the production of a specific intermediate input has been fragmented and outsourced. If the outsourced sector provides a non-traded input, the outsourcing tax can have adverse impact on labor even if it is the most capital-intensive sector of the economy. Thus contrary to expectations, a tax on a capital-intensive sector actually hurts labor. In the case where the intermediate input is traded, the outsourcing tax closes down either the intermediate input producing sector, or the final good producing sector which uses the intermediate input.Fragmentation, Outsourcing, Factor intensity, Tax incidence

Technology Transfer in the Non-traded Sector as a Means to Combat Global Warming

The paper considers a situation where two countries – the North and the South – use a non-traded polluting input to produce the goods for final consumption. The North is more efficient in both, production and abatement processes. The study compares the effects of the transfer of abatement technology by the North to the South under autarky with the free trade situation, assuming that the North pre-commits to an international protocol to keep the global pollution under a fixed level. The conditions under which either full or partial technology is transferred in autarky are determined. It is shown that under free trade no such transfer is possible. With trade even though the North wants a complete transfer of technology, the South refuses it.GHG Emissions, Mitigation, Technology Transfer, International Trade

Rent-Seeking and Reform: Relationship Revisited

The paper revisits the relationship been reform and corruption. We consider a scenario where less efficient domestic and more efficient foreign firms engaged in Cournot competition bribe the local authorities. The local firm pays for imposing a cost to the foreigners, the foreign firm pays so that the local competitor does not get overwhelming advantage. Local authorities, political or otherwise, decide an optimal level of ‘cost’ to be inflicted on the foreign firms which maximize their pay-offs from both. We show that in this set up we may have an equilibrium where drastic reform will be consistent with maximizing rent and therefore an aggressively reformist policy maker can turn out to be extremely corrupt. Interestingly this also exhibits the case where consumers’ welfare increases with reform, although local producers suffer. In general policy makers decision to choose moderate or drastic reforms depend on the degree of efficiency of the local firm

Entrepreneurial culture, occupational choice and tax policy

This paper studies the influence of entrepreneurial culture among social groups in an economy. The cultural factor determines their occupational preferences. We develop a model in which a concentration factor has been used as a measure of business culture determining the occupational choice patterns of otherwise identical social groups. The occupational distribution of individuals from different groups is obtained by comparing expected utilities from employment and entrepreneurship. Based on the labor market outcomes the mean income and income variance of different groups is calculated. Individuals from groups with greater cultural traits display higher relative risk aversion with a high income variance compared to other groups. We propose a tax- subsidy policy and obtain conditions for maximizing social utility