Chi-Chur Chao

Partial Privatization, Foreign Competition, and Optimum Tariff

Using a simple international mixed oligopoly model with one public and one or more foreign firms, this paper examines the effect of partial privatization or foreign competition on optimum tariffs and finds that foreign competition lowers the optimal tariff rate but partial privatization raises it. This result implies that trade liberalization is welfare improving if a country opens up its economy by allowing foreign competition. However, the liberalization policy is not desirable when the country only partially or completely privatizes its publicly-owned enterprises.

Tourism, Dutch Disease And Welfare In An Open Dynamic Economy

This paper examines the effects of an expansion in tourism on capital accumulation, sectoral output and resident welfare in an open economy with an externality in the traded good sector. An expansion of tourism increases the relative price of the nontraded good, improves the tertiary terms of trade and hence yields a gain in revenue. However, this increase in the relative price of nontraded goods results in a lowering of the demand for capital used in the traded sector. The subsequent de-industrialization in the traded good sector may lower resident welfare. This result is supported by numerical simulations.

Are currency devaluations effective? A panel unit root test

Abstract Using a panel unit root test with real exchange rate volatility measures, this paper shows that currency devaluation leads to a short-run contractionary effect for the crisis-affected Asian economies. In addition, devaluation is ineffective in the long run in influencing aggregate output.

Are wholly foreign-owned enterprises better than joint ventures?

Abstract This paper provides a general equilibrium model for examining the individual as well as the joint effects of export requirements and local equity controls of multinational firms. The results suggest that for a small open economy under tariff protection, the desirable policy is 100% foreign ownership of subsidiaries, coupled with an export-share requirement.

Foreign capital inflows and welfare in an economy with imperfect competition

Abstract This paper examines the resource allocational and welfare effects of exogenous inflows of foreign capital in a general-equilibrium model with oligopolistic competition and unemployment. Although the welfare impact for the short run is ambiguous and dependent upon the strength of excess profits and scale economies relative to unemployment in manufacturing, in the long run additional inflows of foreign capital always improve national welfare with capital mobility. Hence, attracting foreign capital remains a sound policy for economies characterized by imperfect competition, scale economies, and regional unemployment.

Content protection, urban unemployment and welfare

A three-sector general equilibrium model is developed to examine the resource allocation and welfare effects of domestic content protection. An increase in domestic content requirements lowers the urban unemployment ratio, the production of the domestic intermediate good, the import of the foreign intermediate good, and the national welfare.

Immigration and Welfare for the Host Economy with Imperfect Competition

In the literature, the beneficial result of immigration to the host country relies on the assumption of perfect competition in the goods market. However, for an economy characterized by imperfect competition, immigration of unskilled workers can be welfare-reducing. The entry of skilled workers is nevertheless welfare-enhancing under a plausible factor-intensity condition.

Environmental Preservation, Sectoral Unemployment, and Trade in Resources

This paper develops a general equilibrium model to examine the optimal level of environmental preservation in terms of its costs and benefits for a closed as well as an open economy. The optimal preservation policy for a closed economy is to tax the general population and use the tax revenue to compensate affected workers. Furthermore, for a small open economy, free trade in resources can meet whatever shortage of domestic productive resources that may occur, thereby leading to a higher optimal level of environmental preservation.

Capital markets, urban unemployment and land☆

Abstract This paper shows that the remarkable result by Khan and Naqvi that a reduction in the capital rental differential always improves welfare despite the presence of a rigid urban wage can be obtained only for the 2 × 2 Harris-Todaro model. In an extended Harris-Todaro framework incorporating a third specific factor, a decrease in a distortion may not necessarily be welfare improving.

Mixed Ownership, Unemployment, and Welfare for a Developing Economy

This paper considers the employment and welfare effects of mixed ownership via partial privatization of state-owned enterprises for a developing economy. An increase in the private ownership lowers the production and, hence, worsens urban unemployment in the short run. However, in the long run, capital moves to the rural region, alleviating the problem of urban unemployment. The employment effect can have a positive contribution to social welfare in the long run.