Chao-Cheng Mai

On the equivalence of tariffs and quotas under duopoly: A conjectural variation approach

Abstract The purpose of this paper is to use a conjectural variation approach to examine the equivalence of tariffs and quotas, set so as to result in the same equilibrium quantity of imports. We have demonstrated that whether tariffs and quotas are equivalent depends crucially upon the particular value of the conjectural variations. Specifically, in the case of equal import tariffs and quotas, the equivalence holds only in the Cournot case; otherwise the domestic price is lower or higher under quotas depending upon whether competition is less or more competitive than Cournot.

Cooperation vs. competition in a spatial model

Abstract This paper discusses the element of cooperation between firms in the form of information exchange through communication into the Hotelling spatial competition model. It is shown that subgame perfect equilibrium in a two-stage game can be achieved in a wide range from minimum differentiation to maximum differentiation, depending upon the relative strength of the cooperation effect over the competition effect. This result is exemplified in the economics of the Silicon Valley.

Optimum Discriminatory Tariffs under Oligopolistic Competition

This paper attempts to present a simple Cournot model to determine the optimal discriminatory tariff rates, when the international market is a homogeneous (heterogeneous) product market. In the model, there are two foreign firms located in two different countries competing for sales in a local market. When the firms sell a homogeneous product and the home country can impose differential tariffs on imports from different countries, then the tariff on the low-cost producer should be hgher. In particular, with constant marginal costs the tariff difference should equal half the cost difference. On the other hand, if the firms sell differentiated products with symmetric linear demands and technologies, then the weaker the degree of product differentiation, the greater is the tariff difference compared with the cost difference.

Optimum location and the theory of the firm under demand uncertainty

Abstract This paper presents a formal mathematical model to investigate the theoretical impacts and implications of demand uncertainty on the optimum location decisions of the firm in linear space. It will be shown that the results and implications of optimum location under uncertainty will be different from that applicable to the state of certainty.

Export subsidies and oligopolistic rivalry between labor-managed and capitalist economies

Abstract The purpose of this paper is to examine the efficacy of export subsidization in a labor-managed economy. It will be shown that contrary to a capitalist economy, an export tax rather than a subsidy becomes an effective policy tool for a labor-managed economy to adopt in order to expand its market share. It is also demonstrated that an export subsidy of the domestic labor-managed country decreases the benefits of its own and the importing country, but increases the welfare of the foreign-competing capitalist.

Urban land policy and housing in an endogenously growing monocentric city

Abstract We examine the long-run effects of urban land policy on housing investment/pricing and city development. Housing is introduced through a socially constant-returns household production technology with uncompensated positive neighborhood externalities. We prove the existence/uniqueness of and characterize the balanced growth spatial equilibrium. Both a control of the housing price at the urban fringe and a zoning policy that relaxes more-than-proportionately the floor area ratio in favor of locations toward the city center are growth-enhancing. The long-run rate of growth is unambiguously lower in a regime where zoning does not differentiate land-use intensity, compared to the conventional setup.

Location and the theory of production Clarifications and extensions

Abstract This paper has attempted to clarify some weaknesses and flaws contained in Miller and Jensens analysis. In particular, we have demonstrated that in Miller and Jensens model, if the production function is homogeneous of degree one and the transport rate functions are independent of quantities shipped, it is impossible to have an interior solution. In addition, we have evaluated the role of the generalized transport rate functions in the profit-maximization location model with and without a prescribed level of output and shown that if transport rates depend on quantities shipped and have constant elasticities, then a linearly homogeneous production function is not sufficient to insure that optimum location is independent of output or the demand function. This result clearly invalidates Miller and Jensens assertion.

Production location and random input price

Abstract The purpose of this paper is to develop systematically the theory of plant location for a competitive firm facing random input price. It will be shown that the impact of input price uncertainty on the firms optimum location depend crucially upon (i) the firms attitude toward risk, (ii) the characteristics of the production function, (iii) the structure of transport costs on inputs and output, and (iv) the type of input usages. Moreover, and more importantly, some conclusions obtained by prior studies on location theory in a certainty world can also be shown to be special cases of our more general results, but some are not justifiable in a world with random input price.

Tariffs versus ratio quotas under duopoly

Abstract This paper presents a conjectural variations model of a duopoly to investigate the question of the equivalence of tariffs and ratio quotas. It is shown that whether or not tariffs and ratio quotas are equivalent is crucially dependent upon (i) the particular value of the conjectural variations parameter and (ii) the target ratio of imports to domestic production in question. Therefore, the monopolistic behavior of the domestic firm over consumers does not necessarily result in non-equivalence. This paper also demonstrates that the price under a ratio quota is always higher than that under a volume quota.

Transport rates structure, optimum location, and theory of production: Reexamination

Abstract The two-stage approach consistently to present a generalized location theory of the firm in linear space is employed. It is shown that the second-order sufficient condition for the profit-maximizing and/or cost-minimizing location problem requires that transport rates increase with distance. In the process, it is demonstrated that this approach provides a compact way to analyze the location and production decisions separately and to avoid the errors made by Mathur and others.