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To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1744-7976.2008.00139.x Byline: Jean-Philippe Gervais (1), Bruno Larue (2), Harvey E. Lapan (3) Abstract: Multilateral negotiations on agriculture in the WTO are making very little progress as developed economies are reluctant to bind trade-distorting domestic support and import tariffs at levels acceptable to developing countries. This paper presents the basic Bagwell-Staiger framework as it relates to agricultural trade negotiations. In its basic version, market access commitments are sufficient to achieve efficient trade agreements. We show that vertical linkages between agricultural goods and processed food commodities may prevent countries to reach an efficient trade agreement. We argue that the features of agricultural supply chains hinder the argument that total discretion over domestic policies is appropriate. Les negociations multilaterales de l'OMC sur l'agriculture progressent tres lentement etant donne que les pays developpes hesitent a maintenir un soutien interne qui fausse les echanges et des barrieres tarifaires a des niveaux acceptables pour les pays en developpement. Le present article traite du modele Bagwell-Staiger dans le contexte des negociations sur le commerce des produits agricoles. Dans sa version de base, les engagements quant a l'acces au marche sont suffisants pour permettre des echanges commerciaux efficaces. Nous montrons que les liens verticaux entre les produits agricoles et les produits alimentaires transformes peuvent empecher les pays d'atteindre un accord commercial efficace. Nous soutenons que les caracteristiques des chaines d'approvisionnement agricole entravent l'argument voulant que l'entiere discretion quant aux politiques interieures soit appropriee. Author Affiliation: (1)Associate Professor, Department of Agricultural and Resource Economics, North Carolina State and CREA, Laval University, 4336 Nelson Hall, Campus Box 8109, Raleigh, NC 27695 (corresponding author: phone: 919-515-6092; fax: 919-515-1824; e-mail:JP_Gervais@ncsu.edu). (2)Canada Research Chair in Agri-food Trade, CREA and Department of Agricultural Economics, and Consumer Studies, Laval University, 4417 Comtois, 2425 Rue de l'agriculture, Quebec, QC G1V 0A6 (phone: 418-656-2131, ext. 5098; fax: 418-656-7821; e-mail:Bruno.Larue@eac.ulaval.ca). (3)University Professor, Department of Economics, Iowa State University, 283 Heady Hall, Ames, IA 50011 (phone: 515-294-5917; fax: 515-294-0221; e-mail:hlapan@iastate.edu).

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1540-5982.2008.00490.x Byline: Jeong-Eon Kim (1), Harvey E. Lapan (2) Keywords: F13; O34 Abstract: Abstract. We develop a model with one innovating northern firm and heterogeneous southern firms that compete in a final product market. We assume southern firms differ in their ability to adapt technology and study southern incentives to protect intellectual property rights. We find that, in a non-cooperative equilibrium, governments resist IPR protection, but collectively southern countries benefit from some protection. We show that, in general, countries with more efficient firms prefer higher collective IPR protection than those with less efficient firms. Given the aggregate level of IPR protection, it is more efficient if the more efficient countries have weaker IPR protection. Abstract (Spanish): Heterogeneite des pays du Sud et politiques de propriete intellectuelle dans ces pays. Les auteurs developpent un modele dans lequel coexistent une entreprise innovatrice du Nord et des entreprises heterogenes du Sud qui se concurrencent dans un marche de produit final. On postule que les entreprises du Sud different dans leur capacitea adopter la technologie et on etudie les differentes incitations au Sud a proteger les droits de propriete intellectuelle (DPI). Il appert que dans un equilibre sans cooperation, les gouvernements resistent a la pression pour qu'on protege les DPI, mais que collectivement ils beneficient de cette protection. On montre qu'en general les pays dont les entreprises sont les plus efficaces supportent une protection collective des DPI plus robuste que ne le font les pays dont les entreprises sont moins efficaces. Le niveau general de protection des DPI etant donne, c'est plus effectif si les pays les plus efficaces ont des niveaux de protection des DPI plus faibles. Author Affiliation: (1)Korea Information Society Development Institute (2)Iowa State University

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jmateco.2006.06.006 Byline: David A. Hennessy (a), Harvey E. Lapan (b) Keywords: Association; Convexity; HARA preferences; Standardness; Superadditivity Abstract: We explore connections between the certainty equivalent return (CER) functional and the underlying utility function. Curvature properties of the functional depend upon how utility function attributes relate to hyperbolic absolute risk aversion (HARA) type utility functions. If the CER functional is concave, i.e., if risk tolerance is concave in wealth, then preferences are standard. The CER functional is linear in lotteries if utility is HARA and lottery payoffs are on a line in state space. Implications for the optimality of portfolio diversification are given. When utility is concave and non-increasing relative risk averse, then the CER functional is superadditive in lotteries. Depending upon the nature of association among lottery payoffs, CERs for constant absolute risk averse utility functions may be subadditive or superadditive in lotteries. Our approach lends itself to straightforward experiments to elicit higher order attributes on risk preferences. Author Affiliation: (a) 578C Heady Hall, Department of Economics & CARD, Iowa State University, Ames, IA 50011-1070, United States (b) 283 Heady Hall, Department of Economics, Iowa State University, Ames, IA 50011-1070, United States Article History: Received 2 August 2005; Revised 19 May 2006; Accepted 13 June 2006

For a homogeneous good, this article studies firm-level production activities when the firm controls a plural number of plants. Through careful construction of cost function technology asymmetries, we inquire into the ordinal structure of the production vector for multiplant cost minimizers. When Schur-convexity of a reference pseudo-cost technology is the principal functional assumption, then ordinal concepts of technical asymmetries map into rank order on the equilibrium production vector. Under a more generalized characterization of the technical asymmetries a multiplant firm encounters, group theory is used to map a cardinal concept of asymmetries into cardinal bounds on the optimum allocation. (JEL L2, D2, C6)

We investigate the strategic behavior between exporting countries that face endogenous terms of trade on the world market. In a non-cooperative setting, if production decisions occur before consumption decisions, the ex-ante optimal export quota is hot time consistent as the ex-post elasticity of the residual foreign import demand curve is lower than the ex-ante elasticity. However, we show that the exporters' inability to irrevocably commit to their quota may be welfare superior to the precommitment solution. If exporters can sell forward a proportion of their exports before production decisions are made, they will do so even though, in equilibrium, it may decrease welfare compared to a situation in which forward markets do not exist. Moreover, the equilibrium with forward markets is welfare inferior to the commitment equilibrium for exporters. Keywords: Time consistency; Export quotas; Precommitment; Forward contracts JEL classification: F13

We investigate how exchange-rate uncertainty affects the foreign direct investment decision of a risk-neutral multinational firm (MNF). We assume the firm can open plants, each with decreasing average costs, in two different countries. Under certainty, the MNF would open only one plant. We demonstrate that with sufficient exchange-rate volatility, the firm can increase expected profits by opening several plants. We also show that if the MNF faces a competitor in the foreign market, the exchange risk, by inducing the MNF to open plants in both markets, may prevent entry by the local competitor.

We analyse strategic environmental policies under international Bertrand oligopoly when firms in different industries, located in different countries, produce differentiated products. Under cooperation , emission prices always exceed the joint marginal damage from pollution. Under non-cooperation , internationally nontradable and tradable emission permit prices are always higher than the domestic marginal damage from emissions (the Pigovian tax); emission taxes can also exceed the Pigovian tax. The non-cooperative emission prices under all instruments can exceed the joint pollution damage. Internationally tradable permits generate outcomes closest to cooperation — they result in the lowest pollution and the highest welfare among all instruments under non-cooperation. Pollution is the highest and welfare the lowest with taxes. Our results provide support for allowing international trade in emission permits even when governments choose their permit levels non-cooperatively. [ABSTRACT FROM AUTHOR]

This paper uses a Stockman-Dellas type two-country, two-good, stochastic general equilibrium model to consider the effects of commercial policy when asset markets are complete. We show that: (i) import and export tariffs do not have symmetric effects because interstate relative prices depend on the entire tariff structure; (ii) when commercial policy is random and exogenously determined, the ex post comparison of utility across states depends upon whether import or export tariffs are used; and (iii) when endowments are random, implying the optimal tariff varies across states, the introduction of asset markets may be welfare-reducing when only import tariffs are used.

When some input decisions can be made after price is realized, separation between production and hedging decisions still holds only under limited circumstances. Under the assumption of a restricted profit function that is quadratic in price, the optimal futures hedge of a risk averse firm equals expected output and a short straddle position is desirable assuming that futures and options prices are unbiased. In this case the use of options not only raises expected utility by reducing income risk, but in general also affects the firm input decisions.

This paper examines the use of inflexible Pigovian taxes/subsidies to correct a stock externality. An optimal control framework is first used to characterize the first-best path for a Pigovian correction that varies continuously. This first-best path is then contrasted with inflexible second- paths, in which the level of the correction can be set only once or twice. The optimal timing of a fixed one-time correction is also studied. A deferment of this correction is desirable when the initial state of the environmental stock is less deteriorated than the first-best steady state, the adjustment costs are sufficiently great., A dynamic model showing the characteristics of Pigovian taxes utilized to correct stock externalities was presented. Examples of stock externalities are occurences of environmental degredation such as ozone layer depletion, global warming, topsoil depletion and ground water contamination. The Pigovian tax characteristics were examined as to adjustments costs and the effects on the environment of the timing of environmental corrections.