Gains from Trade in Used Goods: Evidence from the Global Market for Automobiles

This paper investigates the welfare effects of trade liberalization by exploiting a natural policy experiment in the small open economy of Cyprus. A 1993 law relaxed import restrictions on used vehicles and facilitated the flow of used Japanese vehicles into the country. This led to a dramatic shift of consumer purchases from new to used cars and a substantial expansion of the overall market. Estimated welfare gains are of the order of several hundred dollars per purchaser. The findings are indicative of the potential for substantial gains from liberalizing trade in used goods, which could also alter trade flows and productionautomobile industry, differentiated products, gains from trade, used goods, trade liberalization

Prospects and Limits of Tourism-Led Growth: The International Evidence

We investigate the relationship between tourism specialization and economic growth. We deviate from previous studies - which have reported mixed evidence - by allowing the relationship to take a nonlinear form. We find that tourism specialization is associated with higher rates of economic growth at relatively low levels of specialization but eventually diminishing returns set in and tourism's contribution becomes minimal. The policy lesson is that there is promise for tourism-led growth in developing countries but other economic activities must also be developed in order to carry the economy forward once the potential of tourism-led growth has been exhausted.Forecasting, agricultural economics

Trade-Inducing Quality Standards for Used Durables

We construct a theoretical framework to study the impact of asymmetric quality standards on used durable goods on trade flows, profits and consumer welfare. We show that asymmetry in quality standards generates trade in used goods from high to low standard countries while at the same time reducing trade in new goods. The industry in the exporting country benefits from this change while consumers lose out. Consumers in the importing country are the biggest beneficiaries, but domestic industry is hurt. These results suggest that quality standards on used goods are a powerful policy tool whose use should be monitored by the WTO.quality standards, durable goods, used durables, trade in used goods

Prospects and Limits of Tourism-Led Growth: The International Evidence

We investigate the relationship between tourism specialization and economic growth. We deviate from previous studies - which have reported mixed evidence - by allowing the relationship to take a nonlinear form. We find that tourism specialization is associated with higher rates of economic growth at relatively low levels of specialization but eventually diminishing returns set in and tourism's contribution becomes minimal. The policy lesson is that there is promise for tourism-led growth in developing countries but other economic activities must also be developed in order to carry the economy forward once the potential of tourism-led growth has been exhausted.tourism, tourism specialization, economic growth

Love thy Neighbor, Love thy Kin: Voting Biases in the Eurovision Song Contest

The Eurovision Song Contest provides a setting where Europeans can express their sentiments about other countries without regard to political sensitivities. Analyzing voting data from the 25 contests between 1981-2005, we find strong evidence for the existence of clusters of countries that systematically exchange votes regardless of the quality of their entries. Cultural, geographic, economic and political factors are important determinants of points awarded from one country to another. Other non-quality related factors such as order of appearance, the language of the song and the gender of the performing artist, are also important. There is also a substantial host country effectEurovision, Social Network, Games of Trust

Sales, Quantity Surcharge, and Consumer Inattention

Quantity surcharges occur when firms market a product in two sizes and offer a promotion on the small size: the large size then costs more per unit than the small one. When quantity surcharges occur the sales of the large size decrease only slightly despite the fact that the small size is a cheaper option - a clear arbitrage opportunity. This behavior is consistent with the notion of rationally inattentive consumers that has been developed in models of information frictions. We discuss implications for consumer decision making, demand estimation, and firm pricing.quantity surcharge, sales, promotions, consumer inattention, quantity discounts, nonlinear pricing

The Impact of the Iraq War on US Consumer Goods Sales in Arab Countries

Did the rise in anti-American sentiment caused by the Iraq war aect sales of US goods abroad? We address this question using data on sales of soft drinks and fabric detergents in nine Arab countries. We find a statistically significant but modest and short-lived negative impact of the war on sales of US soft drinks in some countries but no impact on the sales of detergents in any country. Variation in aggregate market shares of US products across countries correlates with consumer attitudes toward the US in the soft drink market but not in the detergent market.consumer behavior, consumer boycotts, Iraq war

Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco

Is there any empirical evidence that firms become more efficient after becoming exporters? Do firms that become exporters generate positive spillovers for domestically-oriented producers? In this paper we analyze the causal links between exporting and productivity using firm-level panel data from three semi-industrialized countries. Representing export market" participation and production costs as jointly dependent autoregressive processes, we look for evidence that firms' stochastic cost processes shift when they break into foreign markets. We find that relatively efficient firms become exporters, but firms' unit costs are not affected by previous export market participation. So the well-known efficiency gap between exporters and non-exporters is due to self-selection of the more efficient firms into the export market, rather than learning by exporting. Further, we find some evidence that exporters reduce the costs of breaking into foreign markets for domestically oriented producers, but they do not appear to help these producers become more efficient.

The Impact of the Iraq War on US Consumer Goods Sales in Arab Countries

Did the rise in anti-American sentiment caused by the Iraq war affect sales of US goods abroad? We address this question using data on sales of soft drinks and fabric detergents in nine Arab countries. We find a statistically significant but modest and short-lived negative impact of the war on sales of US soft drinks in some countries but no impact on the sales of detergents in any country. Variation in aggregate market shares of US products across countries correlates with consumer attitudes toward the US in the soft drink market but not in the detergent market.consumer behavior, consumer boycotts, Iraq war.

Designing Carbon Taxation Schemes for Automobiles: A Simulation Exercise for Germany

Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet little is known about the effectiveness and overall economic impact of these schemes. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to purchasers of low-carbon automobiles. We estimate a discrete choice model of demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. The analysis shows that a well-designed scheme can lead to emission reductions without reducing overall welfare.CO2 emissions, German automobile market, feebates, carbon taxation