Abraham Hollander

Applied International Trade Analysis

PART 1: THE TRADING WORLD: PATTERNS AND POLICY The Pattern of International Trade and Factor Flows The Instruments and Environment of Trade Policy PART 2: COMPETITIVE MARKETS: TRADE AND TRADE POLICY The Ricardian Framework The Factor-Abundance Model Trade Policy Factor Specificity, Mobility and Unemployment Multidimensional Extensions of Trade Theory Empirical Tests of the Factor-Abundance Model PART 3: IMPERFECTLY COMPETITIVE MARKETS: TRADE AND TRADE POLICY Imperfect Competition Trade Policy in Imperfectly Competitive Markets Multinational Production PART 4: SPECIAL TOPICS Economic Integration Exchange Rates and International Trade Growth and International Trade Appendix: Data Methods and Sources References and Additional Reading

Market structure and performance in intellectual property: The case of copyright collectives

Abstract Copyright collectives are associations to whom authors transfer copyrights for purposes of exploitation. These collectives grant licenses for the use of works in their repertory, they negotiate and collect royalties which they distribute to their members and they take legal actions against those who infringe the copyrights to which they hold title. This paper investigates the consequences of the formation of collectives on the number of copyrighted works produced and circulation of these works in the framework of a model of joint production. Welfare issues are also addressed.

Pleasures of Cockaigne: Quality Gaps, Market Structure, and the Amount of Grading

The article explores under what circumstances high-quality producers would not voluntarily submit to grading when low-quality firms would readily do so and under what conditions high-quality firms would have a lesser proportion of their output graded than would their low-quality counterparts. It also investigates how market structure affects the decison to grade, establishing that a competitive industry carries out the optimal amount of grading. When some firms have finite market shares, the industry engages in excessive grading. Copyright 1999, Oxford University Press.

Foreign location decisions by US transnational firms: An empirical study

The paper aims at identifying the variables that are significant in determining the choice of host countries for manufacturing subsidiaries of US transnational firms. The approach that is taken is to relate variables that on the basis on a priori theoretical reasoning influence foreign location decisions, with (a) total market penetration by US firms and (b) the choice these firms make between exporting to their foreign markets and on site manufacturing. Location decisions are viewed as emerging from the interaction of characteristics typical to the industry of the transnational firm and factors specific to potential host countries. Particular attention is devoted to finding out whether locational choices and market shares are interdependent. The sample of observations under investigation consists of the activities of US majority-owned subsidiaries, classified in fourteen industry groupings and operating twenty countries. Sub-samples of countries are also studied. It is found that for the European countries, in particular EEC members, market penetration is dependent on local manufacturing.

Product specification, multi-product screening and bundling: the case of pay TV

Abstract The paper uses a multi-product screening model to explore how pay-TV distributors allocate channel capacity to different program types and how they construct the bundles of channels that subscribers chose from. In contrast to the standard finding on second-degree discrimination, it shows that the optimal bundle composition and prices remove all consumer surplus. It also shows that the specification of the bundle targeted at the subscribers with the highest willingness to pay does not maximize their utility. Finally, it determines that a profit-maximizing firm allocates fewer channels than is optimal to a type of content preferred by the average viewer. In this regard the paper challenges the often repeated claim that for-profit television provides too little programming targeted at minority tastes.

How many karats is gold: Welfare effects of easing a denomination standard

Most consumers benefit from a lowering of the required amount of aurous metal which jewellers must include in products sold as “gold.” However, profits of producers of gold-plated adornments fall. The net welfare effect depends on whether the principal difference between consumers is their appreciation of the gold content, or their valuation of designation gold or gold-plate.

Monopoly and the Preemption of Competitive Recycling

The paper shows that a monopolistic primary producer of a recycleable material will choose to preempt market entry by competitive recyclers unless the cost of producing virgin ingot is very high compared to the cost of reconditioning used material. Unlike earlier results, it is shown that in the absence of transaction costs on scrap sales competition by independent recyclers fails to reduce price below its full-monopoly level. Moreover, if transaction costs are present, the mere threat of entry by independent recyclers may raise the price above that level.

Optimal research and development expenditures under an incremental tax incentive scheme

The effect of an incremental tax incentive on optimal R and D spending of a profit maximizing firm is investigated. A dynamic programming approach permits the complete characterization of an optimal policy for a one-period-memory piecewise linear incentive scheme, and efficient computation of an @e-optimal policy in the more general case.

Umbrella Pricing to Attract Early Entry

An incumbent firm engages in a strategy of umbrella pricing to ward off the development of an advanced technology by a prospective entrant. As a result, the competitor enters the market with an old technology less harmful to the established firm. Both firms benefit from umbrella pricing but static as well as dynamic welfare is reduced. Copyright 1993 by The London School of Economics and Political Science. (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was bo (This abstract was borrowed from another version of this item.)

Pricing and Bundling of Shared Information Goods: The Case of Cable Channels

This chapter looks at the pricing and bundling decisions of a firm that sells a product shared on a regular basis among household members. Examples of such products are computer software, telephone service and cable television subscription. The pricing of shared goods has attracted recent attention in the case of academic journals. An academic journal is a product sold to an individual subscriber who does not share it and to libraries that make the journal available for consultation to readers. Ordover and Willig (1978) have characterized the welfare maximizing combination of personal and institutional subscription prices. Liebowitz (1985) has shown that journal publishers rely increasingly on discriminatory pricing to capture revenues from library visitors whose benefit from sharing is enhanced by improved access to photocopying. Besen and Kirby (1989) found that a seller’s profit increases as the result of sharing when it is less costly for consumers to distribute a work via sharing than for producers to do so by making copies. Varian (2000) has found a condition under which readers and publishers are better off when a portion of books in circulation is made available for sharing in libraries. Further, Bakos et al. (1999) showed that small scale sharing influences profits by affecting the disparity of buyers’ reservation prices. They also establish that when the disparity of reservation prices among members of a group that share is larger than the disparity of the willingness to pay across groups, a seller can set prices that leave less surplus to consumers than in the absence of sharing. In this regard, sharing within groups achieves a result that is akin to bundling.1 This chapter examines the bundling of television channels. The analysis explores when a cable firm will let households choose among the channels on offer, and when it will make an all-channels-or-nothing proposition. Some issues related to the bundling of channels by cable providers have been considered by Chae (1992) who examined the interplay between the costs of production of content and distribution per subscriber. Crampes and Hollander (2005) investigated the composition of channel bundles when subscribers differ in regard to their preferred content mix. Crawford (2004) showed that by bundling each of the top-15 cable networks in the US, cable distributors could increase profits by 4%. This chapter focuses on a different set of determinants of bundling. The analysis assumes away differentiation among channels by postulating that a potential viewer derives the same utility from every channel. It examines how the pricing