Carsten Kowalczyk

Bringing GATT into the Core

This paper calculates international income transfers which implement a Pareto optimal trade equilibrium in a world where many countries trade many goods.

Free Trade, Customs Unions, and Transfers

All countries would agree to immediate global free trade if countries were compensated for any terms-of-trade losses with transfers from countries whose terms-of-trade improve, and if customs unions were required to have no effects on non-member countries. Global free trade with transfers is in the core of a Kemp-Wan-Grinols customs union game.

Trade as transfers, GATT and the core

Abstract We show in our model of international monopoly trade that transfers proposed by Grinols [Grinols, E.L., 1981, An extension of the Kemp-Wan theorem on the formation of customs unions. Journal of International Economics 11, 259–266.] support the grand coalition as a core allocation. We compare these transfers to those supporting the Shapley value

Reforming Tariffs and Subsidies in International Trade

This paper analyzes unilateral and multilateral reform of ad valorem tariffs and subsidies. The paper shows that under substitutability, extensive subsidization of exports is required for an increase in the lowest tariff rate to raise economic welfare. The paper derives also conditions for when a radial reduction of ad valorem tariffs and subsidies may fail to raise economic welfare.

Global Free Trade is in the Core of a Customs Union Game

This paper shows nonemptiness of the core of a customs union game with a status quo equilibrium with tariffs by employing an appropriate notion of the core as in Kowalczyk and Sjostrom (1994, Economica). Specifically, we find that if customs unions may have no effects on nonmember countries as in Ohyama (1972, Keio Economic Studies) and Kemp and Wan (1976, Journal of International Economics) then a subset of countries forming such a customs union does not block global free trade when accompanied by so-called Grinols transfers (Grinols, 1981, Journal of International Economics).

Liberalizing Trade between Large and Small: The Welfare from Three Different Strategies

Much trade liberalization involves large and small countries. This paper presents a formal comparison of the economic welfare effects for the small and large country from unilateral free trade by the small country, from a free trade agreement, and from preferential access to the large countrys market. I show that it matters for the welfare effects of these strategies whether the small country has an effect on the domestic price in its partners domestic market or not. For example, if the small country is so small that it does not, then, paradoxically, a reduction of the small countrys tariff reduces the large partners welfare.

Globalization: Some Reflections and the Road Ahead—A Panel

This chapter is based on a transcription of the panel “Globalization: Some Reflections and the Road Ahead,” moderated by Carsten Kowalczyk, Tufts University, on November 11, 2011, at the Aarhus University conference Globalization: Strategies and Effects, Hotel Koldingfjord, Denmark. Remarks by Avinash Dixit on the collapse of trade after the financial crisis, bad governance as a trade barrier, and the interaction between internet use and globalization are in Sect. 1, remarks by Ronald W. Jones on globalization and the “sclerotic economy” are in Sect. 2, and remarks by Dale T. Mortensen on unemployment, reallocation, and frictions are in Sect. 3. A transcription of the panel discussion is in Sect. 4.

Introduction to Globalization: Strategies and Effects

Globalization implies the continuing expansion and intensification of economic, political, social, cultural and judicial relations across borders. It is furthered by reductions in transportation and communication costs, the rise of new information technologies, such as the internet, and liberalizations in the markets for goods, services, labor, capital, and technology. Although it also occurs within existing legal structures, globalization in many cases involves political decisions about deregulation, free trade, and the integration of markets. It changes the life styles and living conditions for people around the world, presenting new opportunities to some, but risks and threats to others. Individuals, firms, governments, and transnational organizations that are lifted out of the framework of the nation state, like the World Bank, United Nations, the European Union, and multinational firms all face challenges of how to respond to globalization. The present volume provides important information to private and public decision makers who are choosing strategies for production, investment, and public policy in the increasingly globalized society.