Competing for Contacts: Network Competition, Trade Intermediation and Fragmented Duopoly

A two-sided, pair-wise matching model is developed to analyse the strategic interaction between two information intermediaries who compete in commission rates and network size, giving rise to a fragmented duopoly market structure. The model suggests that network competition between information intermediaries has a distinctive market structure, where intermediaries are monopolistic service providers to some contacts but duopolists over contacts they share in their network overlap. the intermediaries' inability to price discriminate between the competitive and non-competitive market segments, gives rise to an undercutting game, which has no pure strategy Nash equilibrium. The incentive to randomise commission rates yields a mixed strategy Nash equilibrium. Finally, competition is affected by the technology of network development. The analysis shows that either a monopoly or a fragmented duopoly can prevail in equilibrium, depending on the network-building technology. Under convexity assumptions, both intermediaries invest in a network and compete over common matches, while randomising commission rates. In contrast, linear network development costs can only give rise to a monopolistic outcome.International Trade, Pairwise Matching, Information Cost, Intermediation, Networks

Information Costs, Networks and Intermediation in International Trade

This paper presents a pairwise matching model with two-sided information asymmetry to analyse the impact of information costs on endogenous network building and matching by information intermediaries. The framework innovates by examining the role of information costs on incentives for trade intermediation, thereby endogenising the pattern of direct and indirect trade. Intermediation is shown to unambiguously raise expected trade volume and social welfare by expanding the set of matching technologies available to traders. Moreover, convexity in network-building costs is necessary for both direct and indirect trade to arise in equilibrium while the pattern of trade is shown to depend on the level of information costs as well as the relative effectiveness of direct and indirect matching technologies with changing information costs. The model sheds light on the relationship between information frictions and aggregate trade volume, which may be non-monotonic as a result of conflicting effects of information costs on the incentives for direct and indirect trade.International Trade, Pairwise Matching, Information Cost, Intermediation, Networks

A Swing-State Theory of Trade Protection in the Electoral College

This paper develops an infinite-horizon, political agency model with a continuum of political districts, in which incumbent politicians can improve their re-election probability by attracting swing voters in key states through strategic trade protection. A unique equilibrium is shown to exist where incumbents build a reputation of protectionism through their policy decisions. We show that strategic trade protection is more likely when protectionist swing voters have a lead over free-trade supporters in states with relatively strong electoral competition that represent a larger proportion of Electoral College votes. US data is used to test the hypothesis that industrial concentration in swing and decisive states is an important determinant of trade protection of that industry. The empirical findings provide support for the theory and highlight an important, and previously overlooked, determinant of trade protection in the US Electoral College.Political Economy, Elections, Electoral College, Swing States, Trade Policy

Product Durability and Trade Volatility

One of the main causes behind the trade collapse of 2008-09 was a significant fall in the demand for durable goods. This paper develops a small country, overlapping generations model of international trade in which goods durability gives rise to a more than proportional fall in trade volumes, as observed in 2008-09. The model has three goods - two durable, traded goods and one non-durable, non-traded good and two factors of production. The durability of goods affects consumers’ lifetime wealth and their optimal consumption bundle across goods and time periods. A uniform productivity shock reduces consumers’ lifetime wealth inducing a re-optimisation away from durables. This gives rise to a more than proportional effect on international trade, provided the non-traded sector is sufficiently capital intensive. The elasticity of trade flows to GDP is found to be increasing in both the degree of durability and the size of the shock. Thus the model provides micro-foundations for the asymmetric shock to the demand for durable goods observed in recessions and clarifies the link between this endogenous shift in preferences and international trade flows. It also explains the observation that deeper downturns are associated with a higher elasticity of trade to GDP. Furthermore, the greater the degree of durability of traded goods, the larger is the share of domestically produced goods in consumption, for plausible factor intensities. This provides an alternative explanation for the home bias in consumption, and hence another explanation for Trefler's "missing trade ".Trade in durable goods; 2008 trade collapse economic growth

Product durability and trade volatility

One of the main causes behind the trade collapse of 2008–09 was a significant fall in the demand for durable goods. This paper develops a small country, overlapping generations model of international trade in which goods durability gives rise to a more than proportional fall in trade volumes, as observed in 2008–09. The model has three goods—two durable, traded goods and one nondurable, nontraded good and two factors of production. The durability of goods affects consumers' lifetime wealth and their optimal consumption bundle across goods and time periods. A uniform productivity shock reduces consumers' lifetime wealth inducing a re-optimisation away from durables. This gives rise to a more than proportional effect on international trade, provided the nontraded sector is sufficiently capital intensive. The elasticity of trade flows to GDP is found to be increasing in both the degree of durability and the size of the shock.> ; Thus the model provides microfoundations for the asymmetric shock to the demand for durable goods observed in recessions and clarifies the link between this endogenous shift in preferences and international trade flows. It also explains the observation that deeper downturns are associated with a higher elasticity of trade to GDP. Furthermore, the greater the degree of durability of traded goods, the larger is the share of domestically produced goods in consumption, for plausible factor intensities. This provides an alternative explanation for the home bias in consumption, and hence another explanation for Trefler’s "missing trade."International trade

International Trade, Minimum Quality Standards and the Prisoners' Dilemma

Unilateral minimum quality standards are endogenously determined as the outcome of a non-cooperative standard-setting game between the governments of two countries. Cross-country externalities from the implementation of minimum quality standards are shown to give rise to a Prisoners' Dilemma structure in the incentives of policy-makers leading to inefficient policy outcomes. The role of minimum quality standards as non-tariff barriers is examined and the scope for mutual gains from reciprocal adjustment in minimum standards analysed. The analysis delivers four results. First, there exist four unregulated Nash equilibria in minimum standards, two symmetric and two asymmetric, depending on the quality ranking of firms in each market. The analysis establishes that in all four cases, unilaterally selected minimum quality standards are inefficient as a result of cross-country externalities. Second, minimum quality standards are shown to operate as non-tariff barriers to trade. Third, the world welfare maximising symmetric standard can be reached through reciprocal adjustments in national minimum standards from either of the two symmetric Nash equilibria. Finally, the scope for mutually beneficial cooperation is shown to be significantly restricted when cross-country externalities are asymmetric. Asymmetric externalities make a cooperative agreement at the world optimum infeasible.standards, quality, international trade, standard coordination

Information and quality in international trade and the political economy of trade protection

This thesis examines how information costs, minimum quality standards and electoral incentives affect international trade and trade policy choice. First, a new pairwise matching model with two-sided information asymmetry is developed to analyse the impact of information costs on endogenous network-building and matching by information intermediaries. The framework innovates by examining the role of information costs on incentives for trade intermediation, thereby endogenising the pattern of direct and indirect trade. The model is extended to analyse the strategic interaction between two information intermediaries who compete in commission rates and network size, giving rise to a fragmented duopoly market structure. Second, unilateral minimum quality standards are endogenously determined as the outcome of a non-cooperative standard-setting game between the governments of two countries. Cross-country externalities from the implementation of minimum quality standards are shown to give rise to a Prisoners' Dilemma structure in the incentives of policy-makers leading to inefficient policy outcomes. The role of minimum quality standards as non-tariff barriers is examined and the scope for mutual gains from reciprocal adjustment in minimum standards analysed. Asymmetric externalities make a cooperative agreement at the world optimum infeasible. Third, a new multi-jurisdictional political agency model is developed to analyse electoral incentives for trade protection in an electoral college. A unique equilibrium is shown to exist where political incumbents build a reputation for protectionism through their policy decisions in their first term of office. A spatial dimension is introduced that shows how trade policy incentives hinge on the distribution of swing voters across decisive, swing states. The empirical analysis augments a benchmark test of the "Protection for Sale" mechanism to include a measure of how industries specialise geographically in swing and decisive states. The findings lend support to the theory

Prevalence of asymptomatic bacteriuria in type 2 diabetic subjects with and without microalbuminuria

<p>Abstract</p> <p>Background</p> <p>Diabetic subjects, especially women, show high prevalence of asymptomatic bacteriuria (ASB). The aim of the present study was to evaluate the prevalence of ASB in subjects with type 2 diabetes mellitus (T2D) with and without microalbuminuria (MA).</p> <p>Findings</p> <p>A hundred diabetic subjects with MA (53 males/47 females, mean age ± standard deviation: 65.5 ± 11.1 years) and 100 diabetic subjects without MA (52 males/48 females, mean age ± standard deviation: 65.4 ± 11.3 years), consecutively attending the outpatient diabetes clinic of our hospital were recruited in the study. Subjects with overt diabetic nephropathy or nephropathy from other causes were excluded. In addition, subjects with symptoms of urinary track infection or use of antimicrobial drugs in the last 14 days were excluded by the study.</p> <p>Diabetic subjects with MA showed increased prevalence of ASB compared to diabetic subjects without MA (21% versus 8%, P < 0.001, respectively). <it>Escherichia coli </it>was the most prevalent pathogen isolated in diabetic subjects with and without MA (12% versus 3.0%, P = 0.01, respectively) followed by <it>Proteus mirabilis </it>(6% versus 5%, P = 0.75, respectively) and <it>Klebsiella </it>spp (5% versus 1%, P = 0.09, respectively). Univariate logistic analysis showed that ASB was associated with the presence of coronary artery disease [odds ratio (OR): 0.29, 95% Confidence Intervals (95% CI): 0.09-0.95, P = 0.04] and gender (OR: 0.09, 95% CI: 0.02-0.35, P < 0.001) in the diabetic study group with MA.</p> <p>Conclusions</p> <p>ASB is more prevalent among T2D subjects with MA. Screening for ASB is warranted in diabetic patients especially if pyuria is detected in urine analysis since ASB has been found to be a risk factor for developing symptomatic urinary tract infection.</p

Information costs, networks and intermediation in international trade

This paper presents a pairwise matching model with two-sided information asymmetry to analyse the impact of information costs on endogenous network building and matching by information intermediaries. The framework innovates by examining the role of information costs on incentives for trade intermediation, thereby endogenising the pattern of direct and indirect trade. Intermediation is shown to unambiguously raise expected trade volume and social welfare by expanding the set of matching technologies available to traders. Moreover, convexity in network-building costs is necessary for both direct and indirect trade to arise in equilibrium while the pattern of trade is shown to depend on the level of information costs as well as the relative effectiveness of direct and indirect matching technologies with changing information costs. The model sheds light on the relationship between information frictions and aggregate trade volume, which may be non-monotonic as a result of conflicting effects of information costs on the incentives for direct and indirect trade