Language：English   Publishing type：Research paper (scientific journal)   Publisher：ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD  

This study considers the role of the cost uncertainty associated with meeting the rules of origin (ROO) in a free trade area/agreement (FTA). While the literature tends to overlook the cost uncertainties of ROO compliers, we show that the uncertain production costs resulting from meeting the ROO yield the coexistence of compliers and non-compliers in symmetric oligopoly firms. We also show that the regime in which compliers and non-compliers coexist is not the best one for an FTA importer, while it may be the best one for world welfare. We also discuss the case that uncertain production costs are firm-specific.

DOI： 10.1080/16081625.2017.1346478

Web of Science

Scopus

researchmap

Language：English   Publishing type：Research paper (scientific journal)   Publisher：ELSEVIER SCIENCE BV  

The purpose of this paper is to consider the relationship between monopoly transport prices and an industry's technology level of research and development (R&D). Although R&D efficiency is often considered a key factor to improve the performance of firms in an industry, we demonstrate that this standard view does not always hold in a trade model involving a monopoly transporter. In a one-way duopoly case, an exporter competes with a local firm in the local market but must pay a transport charge to the monopoly transporter to carry its product. We show that higher R&D efficiency may reduce the investments of an exporter. We further investigate a case of two-way trade comprising two symmetric countries. We also show that higher R&D efficiency may reduce the producers' profit. (c) 2014 Elsevier B.V. All rights reserved.

DOI： 10.1016/j.econmod.2014.12.019

Web of Science

Scopus

researchmap

Language：English   Publishing type：Research paper (scientific journal)   Publisher：PERGAMON-ELSEVIER SCIENCE LTD  

We investigate the effects of port privatization on port usage fees, firm profits, and welfare. Our model consists of an international duopoly with two ports and two markets. When the unit transport cost is high, port privatization reduces port usage fees, although neither government has an incentive to privatize its port. The equilibrium governmental decisions are inconsistent with the desirable outcome if the unit transport cost is not high enough. The government of the smaller country, in terms of market size, is more likely to privatize its port, and the government of the larger country is more likely to nationalize its port to protect its domestic market. (C) 2014 Elsevier Ltd. All rights reserved.

DOI： 10.1016/j.trb.2014.04.010

Web of Science

Scopus

researchmap

Publishing type：Research paper (scientific journal)  

This paper examines how an input supplier's monopoly power affects exporters' choice between compliance and noncompliance with rules of origin (ROO) in a free trade area (FTA). When the regional input supplier has monopoly power, the number of compliers largely affects the input price. This is because to meet ROO, exporters must use a certain ratio of the input originated within the area. In such a case, each exporter has an incentive to choose noncompliance with ROO if the rival exporter complies. Because this incentive yields strategic substitution between symmetric exporters, the coexistence of the complier and the non-complier appears in equilibrium. Our model consists of three final-good producers (one in an importing country and two in an exporting country) and one input supplier, which is in the importing country and has monopoly power. We show that within the range of parameter values for which some exporters comply with ROO, the content rate affects the output of the final-good producer in the importing country and the country's welfare in a U-shaped fashion. The content rate levels that allow the coexistence of the complier and the non-complier minimize welfare. © 2013 Springer Science+Business Media New York.

DOI： 10.1007/s10842-013-0159-8

Scopus

researchmap

Language：English   Publishing type：Research paper (bulletin of university, research institution)  

researchmap

Publishing type：Research paper (scientific journal)  

We study a three-country three-firm free trade area (FTA) trade model with rules of origin (ROO) under international R&D competition. The external tariff is chosen by the country importing final goods in the FTA. If the FTA chooses a higher content rate of ROO, the country importing final goods chooses a higher tariff in order to compensate for lower consumer surplus. We have three results. First, if the FTA raises the content rate, it raises the costs of exporters within the area, but if the R&D cost is sufficiently low, the exporters actually increase exports and their profits also increase. Second, if the firms within the FTA are less efficient than outsiders, the social welfare of countries importing final goods is affected by the content rate in a U-shaped fashion. A tightening of ROO may reduce the social welfare of importing countries since it may replace productive firms outside the FTA with less productive local firms. Third, if the productivity within an FTA is relatively high, the optimal content rate of ROO for the importing country within the FTA is 100%. In that case, the country importing final goods does not need to rely on imports from outside. Since an increase in the content rate of ROO increases external tariff, the most stringent ROO requirement is desirable for that country.

Scopus

researchmap

Language：English   Publishing type：Research paper (bulletin of university, research institution)  

researchmap

Language：English   Publishing type：Research paper (scientific journal)   Publisher：CITY UNIV HONG KONG, DEPT ECONOMICS & FINANCE  

This paper presents a model of a free trade area (FTA) with rules of origin (ROO) under an oligopolistic final goods market. Following the existing literature, we also consider ROO to serve as a protectionist device and mainly focus on the interaction between ROO and the subsidy policy. A paradoxical result is considered: if the government of the final goods exporter within the ETA is the first mover, it chooses export tax. Furthermore, we show that the profit of a firm located in the ETA increases due to a reduction in the external tariff.

DOI： 10.1080/16081625.2010.9720852

Web of Science

Scopus

researchmap