Strategic Trade Theory in the Brazil-Canada WTO Dispute

Social and Behavioral SciencesThe market for regional jets is an excellent example of imperfect competition as only two firms, Canada’s Bombardier and Embraer of Brazil, compete for market share. In a market with non-cooperative rivalries and imperfect competition, there is an incentive for governments to subsidize the domestic firm and thus increase its profits at the expense of the foreign firm. In the strategic rivalry between Bombardier and Embraer the stakes were so high that both governments filed complaints at the WTO. Although there have been a number of strategic trade studies conducted on competition in the civil aircraft market, no studies have simulated the messy trade war between Canada and Brazil during the 1990s. The purpose of this study is to prove that the subsidy programs run by Brazil and Canada were jointly suboptimal and that the resolution of the dispute via the WTO had positive terms of trade benefits for each country. To evaluate the impact of Embraer’s entrance followed by the reduction of subsidies per the WTO mandated decisions, a calibrated model based off those developed by Baldwin and Krugman (1988) and Baldwin and Flam (1989) will be employed. As this project is still a work in progress the results of the simulations cannot be commented on. However, based off the results of the studies mentioned above, I expect to show a decrease in prices upon Embraer’s subsidized entrance into the market (and thus a terms of trade loss) and an increase in prices after the WTO ordered both sides to reduce their subsidy programs. These results will hopefully simulate the terms of trade losses of the jointly suboptimal subsidy. Through this study I hope to further highlight the overall negative impact subsidies can have on a country’s trade relations and terms of trade.2015 Summer Undergraduate Research FellowshipAcademic Major: International Studie

Strategic Trade Theory in the Brazil-Canada WTO Dispute

The market for regional jets is an excellent example of imperfect competition, with two firms, Canada’s Bombardier and Embraer of Brazil, competing for market share. In a market with non-cooperative rivalry, governments have an incentive to subsidize a domestic firm and thus increase its profits at the expense of a foreign firm. However, strategic trade theory tells us that subsidy competitions like the one between Canada and Brazil in the regional jet market are jointly suboptimal. Moreover, under the WTO’s Agreement on Subsidies and Countervailing Measures, subsidies meant to stimulate exports are illegal. In fact, Canada and Brazil both brought charges against each other at the WTO and won. Despite the jointly suboptimal nature of subsidies and the forum for dispute resolution provided by the WTO, the dispute between the two countries dragged on for years. The first aim of this study was to show that the use of export subsidies in the regional jet market was suboptimal. The second goal was to identify the factors that prevented an agreement to limit subsidies, based on reviewing literature on WTO disputes and studying the political and economic influence of the two firms. By using a simple calibration model my preliminary results show a combined net welfare loss for the two countries of roughly $260 million. Furthermore, my research indicates the WTO enforcement mechanism, the economic value of the two firms, and the firms’ political influence all contributed to intransigence and a delayed compromise. Although the WTO was never designed as a potent enforcer of its own rules, cases in which the economic importance of a firm translate to enduring non-compliance undercut both the legitimacy of the WTO and the free trade regime it supports.No embargoAcademic Major: International Studie

Bitangent planes of surfaces and applications to thermodynamics

The classical van der Waals equation, applied to one or two mixing fluids, and the Helmholtz (free) energy function $A$ yield, for fixed temperature $T$, a curve in the plane $\mathbb{R}^2$ (one fluid) or a surface in 3-space $\mathbb{R}^3$ (binary fluid). A line tangent to this curve in two places (bitangent line), or a set of planes tangent to this surface in two places (bitangent planes) have a thermodynamic significance which is well documented in the classical literature. Points of contact of bitangent planes trace `binodal curves' on the surface in $\mathbb{R}^3$. The study of these bitangents is also classical, starting with D.J. Korteweg and J.D. van der Waals at the end of the $19^{\rm th}$ century, but continuing into modern times. In this paper we give a summary of the thermodynamic background and of other mathematical investigations and then present a new mathematical approach which classifies a wide range of situations in $\mathbb{R}^3$ where bitangents occur. In particular, we are able to justify many of the details in diagrams of binodal curves observed by Korteweg and others, using techniques from singularity theory.Comment: 26 pages, 9 figure

Generalised epipolar constraints

The frontier of a curved surface is the envelope of contour generators showing the boundary, at least locally, of the visible region swept out under viewer motion. In general, the outlines of curved surfaces (apparent contours) from different viewpoints are generated by different contour generators on the surface and hence do not provide a constraint on viewer motion. Frontier points, however, have projections which correspond to a real point on the surface and can be used to constrain viewer motion by the epipolar constraint. We show how to recover viewer motion from frontier points and generalise the ordinary epipolar constraint to deal with points, curves and apparent contours of surfaces. This is done for both continuous and discrete motion, known or unknown orientation, calibrated and uncalibrated, perspective, weak perspective and orthographic cameras. Results of an iterative scheme to recover the epipolar line structure from real image sequences using only the outlines of curved surfaces, is presented. A statistical evaluation is performed to estimate the stability of the solution. It is also shown how the full motion of the camera from a sequence of images can be obtained from the relative motion between image pairs

Reflexion maps and geometry of surfaces in R^4

In this article we introduce new affinely invariant points---`special parabolic points'---on the parabolic set of a generic surface $M$ in real 4-space, associated with symmetries in the 2-parameter family of reflexions of $M$ in points of itself. The parabolic set itself is detected in this way, and each arc is given a sign, which changes at the special points, where the family has an additional degree of symmetry. Other points of $M$ which are detected by the family of reflexions include inflexion points of real and imaginary type, and the first of these is also associated with sign changes on the parabolic set. We show how to compute the special points globally for the case where $M$ is given in Monge form and give some examples illustrating the birth of special parbolic points in a 1-parameter family of surfaces. The tool we use from singularity theory is the contact classification of certain symmetric maps from the plane to the plane and we give the beginning of this classification, including versal unfoldings which we relate to the geometry of $M$.Comment: 18 pages, 4 figures, presented at the conference to celebrate the 60th birthday of Goo Ishikawa, Bedlewo, Poland, September 201