Limiting Cross-Retaliation when Punishment is Limited: How DSU Article 22.3 Complements GATT Article XXVIII

This paper analyzes two prominent institutional rules in the international trading system: a lim- ited cross-retaliation rule characterized by the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) Article 22.3 and a limited punishment rule characterized by the General Agreement on Taris and Trade (GATT) Article XXVIII. In general, both rules are designed to limit the countermeasures upon a violation; however, the former rule species the limits of composition in retaliation, whereas the latter one designates the limits of retaliation magnitude. We show that, albeit seemingly unrelated, the limited cross-retaliation rule complements the limited punishment rule in per- mitting greater trade liberalization. Specically, we show how the limited cross-retaliation rule also helps limit the incentives to violate the trade agreement when the limited punishment rule prevails.

Starting Small in Free Trade Agreements

This paper analyzes the structure of cooperation between two large countries under one-sided incomplete information. Foreign government privately observes its likelihood of experiencing a political economy shock in each period. Home government’s prior belief about this likelihood is updated in a Bayesian fashion as the relationship continues. We show that the home government employs its privilege to design a contract so as to start with a few-goods-agreement, and increase the extent of cooperation gradually as its belief is favorably updated through periods. We also provide the conditions under which the home government makes the partner reveal its type in the beginning, or enables it to stay in a cooperative relationship without a complete revelation. As opposed to conventional approaches that relate gradualism with cost of liberalization, we show that asymmetric information provides a sufficient reason for gradualism to emerge.Gradualism, Free Trade Agreements, Asymmetric Information

Statistics of a hydrophobic chain near a hydrophobic boundary

We study the behaviour of a hydrophobic chain near a hydrophobic boundary in two dimensions, using the decorated lattice model of Berkema and Widom [G.T. Barkema and B. Widom, J. Chem. Phys. 113, 2349 (2000)] to obtain effective, temperature dependent intrachain and chain-boundary interactions. We use these interactions to construct two model hamiltonians which can be solved exactly. Our results compare favorably with preliminary Monte Carlo computations, using the same effective interactions. At relatively low temperatures and at high temperatures, we find that the chain is randomly configured in the ambient water, and detached from the wall, whereas at intermediate temperatures it adsorbs onto the wall in a stretched or partially folded state, again depending upon the temperature, and the energy of solvation.Comment: 6 pages text, 11 figure

Knowledge Flows, Patent Citations and the Impact of Science on Technology

Technological innovation depends on knowledge developed by scientific research. The num-ber of citations made in patents to the scientific literature has been suggested as an indicator of this process of transfer of knowledge from science to technology. We provide an intersec-toral insight into this indicator, by breaking down patent citations into a sector-to-sector ma-trix of knowledge flows. We then propose a method to analyze this matrix and construct vari-ous indicators of science intensity of sectors, and the pervasiveness of knowledge flows. Our results indicate that the traditional measure of the number of citations to science literature per patent captures important aspects intersectoral knowledge flows, but that other aspects are not captured. In particular, we show that high science intensity implies that sectors are net suppli-ers of knowledge in the economic sector, but that science intensity does not say much about pervasiveness of either knowledge use or knowledge supply by sectors. We argue that these results are related to the specific and specialized nature of knowledge.Knowledge, Input-Output Analysis, Knowledge Flow Matrices, Science-to-Technology Transfer, Patents

A stabilized finite element method for the two-field and three-field Stokes eigenvalue problems

In this paper, the stabilized finite element approximation of the Stokes eigenvalue problems is considered for both the two-field (displacement–pressure) and the three-field (stress–displacement–pressure) formulations. The method presented is based on a subgrid scale concept, and depends on the approximation of the unresolvable scales of the continuous solution. In general, subgrid scale techniques consist in the addition of a residual based term to the basic Galerkin formulation. The application of a standard residual based stabilization method to a linear eigenvalue problem leads to a quadratic eigenvalue problem in discrete form which is physically inconvenient. As a distinguished feature of the present study, we take the space of the unresolved subscales orthogonal to the finite element space, which promises a remedy to the above mentioned complication. In essence, we put forward that only if the orthogonal projection is used, the residual is simplified and the use of term by term stabilization is allowed. Thus, we do not need to put the whole residual in the formulation, and the linear eigenproblem form is recovered properly. We prove that the method applied is convergent, and present the error estimates for the eigenvalues and the eigenfunctions. We report several numerical tests in order to illustrate that the theoretical results are validated.Peer ReviewedPostprint (author's final draft