Dao-Zhi Zeng

Spatial inequality, globalization, and footloose capital

This paper shows the equivalence of spatial inequalities in industrial location and in income by revisiting the home market effect (HME) without any homogeneous good based on a reconstructed footloose capital model. In this simple framework, spatial inequalities in industrial location and in income are the HMEs in terms of firm share and wage, respectively. We show that the larger country has a more-than-proportionate share of firms and a higher wage. Furthermore, both the wage differential and the industrial location in the larger country evolve in an inverted U-pattern when transport costs decline. Finally, we analytically examine the effects of trade liberalization on the welfare and show that both countries may gain from globalization.

Complexity of the minimum base game on matroids

This paper studies the complexity of computing solution concepts for a cooperative game, called the minimum base game (MBG) (E, c), where its characteristic function c : 2E ↦ ℜ is defined as c(S) = (the weight w(B) of a minimum weighted base B ⊆ S), for a given matroid M = (E, ℐ) and a weight function w : E ↦ ℜ. The minimum base game contains, as a special case, the minimum spanning tree game (MSTG) in an edge-weighted graph in which players are located on the edges. By interpreting solution concepts of games (such as core, τ-value and Shapley value) in terms of matroid theory, we obtain: The core of MBG is nonempty if and only if the matroid M has no circuit consisting only of edges with negative weights; checking the concavity and subadditivity of an MBG can be done in oracle-polynomial time; the τ-value of an MBG exists if and only if the core is not empty, the τ-value of MSTG can be computed in polynomial time while there is no oracle-polynomial algorithm for a general MBG; computing the Shapley value...

Double-offer arbitration

Abstract This paper proposes a new arbitration rule, double-offer arbitration (DOA), which aims to improve final-offer arbitration (FOA), a well-known method to settle a dispute between two disputants. Under DOA, each disputant makes double offers, primary and secondary, for settlement. If the offers of two disputants do not converge, the arbitrator evaluates the two double offers by a criterion function, then adopts the primary offer of the disputant with a better criterion value. In the literature, it has been shown that under some conditions, a Nash equilibrium exists under FOA in which the offers diverge. However, we show that, under similar conditions, there is also a Nash equilibrium under DOA, in which the secondary offers of two disputants converge. Therefore, the arbitrators presence in the arbitration process is necessary, but not his/her actual choice.

Tourism and Industrial Agglomeration

Tourism generates considerable income and employment in host countries and regions, which substantially improves local economies. Meanwhile, the manufacturing sector remains the most important part in regional and national economies. This paper investigates their interdependence through a general-equilibrium analysis. On the one hand, a tourism boom is pro-industrialization because the income generated by tourism attracts more manufacturing firms and, on the other hand, de-industrialization for attracting labour from the manufacturing sector. We clarify conditions of trade balances in three sectors. The welfare analysis clarifies conditions for the smaller country to be better off, and conditions for the equilibrium to be optimal.

Mobile capital and the home market effect

The home market effect (HME) reveals how industrial location depends on country size. One-factor or immobile-labor models are employed in early studies of the HME, in which the transport costs of the homogeneous good are found to be essential. In more recent literature, two-factor models, with the addition of mobile capital, are also used. This paper compares these models and obtains the following results. First, mobile capital brings the existence of the HME for any transport costs of the homogeneous good. In addition, in a two-factor model, a larger share of capital may result in a smaller firm share, and firms may relocate to a smaller country when the homogeneous good market is more integrated.

Generalized metarationalities in the graph model for conflict resolution

A metarational tree is defined within the graph model for conflict resolution paradigm, providing a general framework within which rational behavior in models with two decision makers (DMs) can be described more comprehensively. A new definition of stability for a DM that depends on the total number, h, of moves and counter-moves allowed is proposed. Moreover, the metarational tree can be refined so that all moves must be unilateral improvements, resulting in a new set of stability definitions for each level of the tree. Relationships among stabilities at various levels of the basic and refined trees are explored, and connections are established to existing stability definitions including Nash stability, general metarationality, symmetric metarationality, sequential and limited-move stability, and policy equilibria.

HOME MARKET EFFECT AND TRADE COSTS

Concerning industrial location, the home market effect (HME) predicts that a large country is a net exporter of industrial goods. Recent literature shows that high transport costs in the traditional sector may obscure the HME in an early model of two sectors a la Helpman and Krugman. This paper presents an alternative model that displays the relationship between the HME and arbitrary transport costs while allowing for the derivation of analytical results by simple algebra. Our results show that the transport costs in the traditional sector do not obscure the HME but constitute a dispersion force that decreases the impact of the HME.

Group decision with inconsistent knowledge

In this paper, dual exponential possibility distributions, namely, upper and lower exponential possibility distributions, are identified from the given data to characterize a decision-makers knowledge. A decision groups knowledge can be represented by a set of such dual possibility distributions. The inherent diversity of knowledge among decision-makers is characterized by a conflict index. A conflict resolution model is proposed based on the conflict index, which integrates multiple possibility distributions identified into a new one to represent compromised knowledge of a decision group. As an application, a portfolio selection problem with multiple decision-makers is considered.

DISPERSION FORMS: AN INTERACTION OF MARKET ACCESS, COMPETITION, AND URBAN COSTS

This paper analyzes a two-region model including multiple industries with different transport costs. Two results are derived. First, dispersion occurs for small transport costs, but the specific dispersion patterns depend on the level of urban costs. This results from an interaction of the market-access effect on consumers, the market-access effect on firms, the competition effect, and the urban-cost effect. Second, decreasing transport cost tends to let industries with lower transport costs disperse, although the shares of industries locating in the larger region are not in order of their transport costs. We further provide some empirical data concerning the second result.

On Chamberlinian-Ricardian Trade Patterns

This study provides a simple, many-industry model of trade which emphasizes the interaction between cross-country technical heterogeneity (i.e., a Ricardian aspect) and monopolistic competition among producers of differentiated products (i.e., a Chamberlinian aspect) as determinants of trade patterns. It is shown that the emergence of intra-industry trade is crucially dependent on the shape of the technology index schedule, which is obtained as a step-function.