Guang-Zhen Sun

The measurement of structural differences between economies: An axiomatic characterization

Summary. In empirical studies concerning comparison of economic structures and/or structural changes of economies, it is quite useful to employ an aggregate index to describe the structural difference (similarity). This paper offers an axiomatic characterization of the measurement of structural difference between economies that leads to some difference (similarity) index which is practically useful in empirical studies.

Exclusion of self evaluations in peer ratings: An impossibility and some proposals

Abstract. In the popularly used ranking method of peer rating, the exclusion of the evaluations/marks given to oneselves is intuitively appealing and has been actually practiced, since a person/university/country typically is biased in favor of itself. This short paper shows that this apparently reasonable principle of self-exclusion may give unacceptable rankings. In particular, it may rank B over A despite the fact that everyone including B ranks A over B. An impossibility theorem (in two versions) is proved, showing that, if the self-awarded marks are excluded, no method of ranking can satisfy some compelling conditions like monotonicity, neutrality, and weak unanimity. Some proposals to overcome the difficulty are discussed. While no ideal proposal has been discovered, some may be practically acceptable in most cases.

The Effect of Number and Size of Interest Groups on Social Rent Dissipation

This paper develops two models of the lobbying of interest groups to examine the effect of the number and size of interest groups on rent dissipation. In cases where individuals ignore the effect of the lobbying activities on the rent size, the number of groups is negatively related to rent dissipation and there exists an inverse relation between the extent of egalitarianism of within-group rent sharing rules and the total rent dissipation in the symmetric setting. Model two examines the case where each individual in each group takes into account the effect of lobbying activities on the total “pie”, of which she/he competes for a share through within-group and between-group interaction. The relation between the number of symmetric groups and the total rent dissipation is shown to be an inverted “U”-shape, contrary to the conventional wisdom that holds a monotonous relation between the two variables.

The Economics of E-Commerce and Networking Decisions

PART I: KEYNOTE SPEECHES Inframarginal Versus Marginal Analysis of Networking Decisions and E-Commerce Y-K.Ng A Review of the Literature of Inframarginal Analysis of Network of Division of Labour X.Yang PART II: E-COMMERCE E-Commerce, Transaction Cost and the Network of Division of Labour: A Business Perspective H.Shi & H.Mathysen An Equilibrium Model of Hierarchy X.Yang A General Equilibrium Model with Impersonal Networking Decisions and Bundling Sale K.Li Legislation, Electronic Commerce and the Common Law A.Field E-Commerce in China: Problems and Potential J.Wong &W.Chee Kong Networking Decisions and Bundling Sale Ke Li PART III: IMPERSONAL NETWORKING AND ENDOGENOUS SPECIALIZATION: THEORY AND APPLICATIONS Toward a Theory of Impersonal Networking Decisions and Endogenous Structure of the Division of Labour G-Z.Sun, X.Yang & S.Yao Identification of Equilibrium Structures of Endogenous Specialization: A Unified Approach Exemplified G-Z.Sun Transaction Efficiency, Division of Labour and Foreign Direct Investment: A Unified Model D.Yang The Division of Labour and the Allocation of Time M.Lio PART IV: TRANSACTION COSTS AND THE DIVISION OF LABOUR MEASUREMENT AND EMPIRICAL ANALYSIS An Indirect Approach to the Identification and Measurement of Transaction Costs G.Rivers An Empirical Study on the Division of Labour and Economic Structural Changes M.Lio & M.Liu Endogenous Transaction Costs and Division of Labour X.Yang & Y.Zhao

Income Dispersion and Price Discrimination

This paper analyses the effects of inter-market and intra-market income heterogeneities on output and social welfare under uniform pricing and differential pricing regimes by considering a finite number of markets. We first derive the linear demand curve in each market under plausible conditions, and then show that more markets (and consumers) are excluded under uniform pricing the higher are the inter-market income differences. We also show that adding markets, even of lower income levels than those of existing markets, helps to decrease prices and thus cause more markets to be served. Implications of intra-market income dispersion are also explored.

Characterizing the Symmetric Mixed-Strategy Equilibrium in Rent-Seeking Contests: A Real Analysis Approach

We take a real analysis approach to characterize the symmetric mixed-strategy equilibrium (SMSE) of rent-seeking contests for any intermediate value of the decisiveness parameter, allowing for both the ratio-form and the difference-form of contest success functions (CSF) that are axiomatized in Skaperdas (1996). For the ratio-form Tullock contest, we reproduce the results obtained by Ewerhart (2015) by invoking sophisticated complex analysis that SMSE is supported by a countably infinite set of pure strategies that has zero bid as an accumulation point and that the rent is completely dissipated. For the Hirshleifer-style difference-form of CSF, we show that the support of SMSE is a finite set of pure strategies including zero bid as one mass point and that the rent is partially dissipated. The similarity and differences in the profile of SMSE between the two canonical forms of CSF in the literature of contests are thereby illuminated.

THE DIVISION OF LABOR AND ROUNDABOUT PRODUCTION: ALLYN YOUNG REVISITED

This paper investigates Allyn Youngs two important doctrines concerning the division of labor and roundabout production: Apart from advancement in the state of knowledge, the progressive division of labor, which can take place within a given population, brings about the adoption of more specialized, differentiated intermediate goods in the production process; the level of division of labor and the extent of the market depend on each other. Using a general equilibrium model with increasing returns to specialization, economies of complementarity between intermediate goods, and transaction costs, we demonstrate that the level of division of labor and the number of intermediate goods increase concurrently as transaction conditions are improved.

A Model of Parallel Contests

We develop a model of two parallel contests, asymmetric in quantity of homogeneous prizes open to contest, with a finite number of homogeneous risk-neutral bidders. Whether the bidder upon entry into a particular contest is aware of the realized number of competing contestants in the contest is irrelevant to the expected effort at equilibrium. At equilibrium the expected effort per capita in the larger contest (the contest with more prizes) is greater than that in the smaller one. The larger contest nonetheless does not attract enough contestants to achieve optimum in rent extraction from the bidders.

Economic integration and development of the Chinese economy: an introduction

Economies may be integrated through flows among them of production factors such as labour (immigration), capital and technology (FDI, technology diffusion, joint undertaken R&D activities, etc.), and of products in the form of trade. Economic integration can be therefore conceptualized as a process of removal of obstacles to economic activities across the economies. Markets for goods and services, and those for factors of production as well, are increasingly competitive with greater degree of economic integration. Consequently, economic integration, in principle, leads to welfare improvement, through reducing the various transaction costs, enlarging the markets of products and services provided by the different parts of the integrated system, and thereby promoting the division of labour and competition. Problems resulting from integration, on the other hand, are in no way insignificant. Among other things, the kind of chain reactions that take place when something goes wrong somewhere in the system, credit defaults for instance, may result in sizeable multiplication and proliferation of such disturbance throughout the whole system through various connections. That certainly imposes a real problem in coordination. How far economic integration can, and should go, depends upon many factors, be they geographical, historical, cultural, political, religious, or economic. Economic integration may be classified as follows, in an increasing order of integration: free trade area, customs union, common market, economic and monetary union, and complete economic integration.1 For instance, while Europe has successfully moved from unified customs to the current monetary union with one single currency, the Asia Pacific economies falls far behind, for good reasons, toward a comparable regime, especially in monetary unification. What is common, however, is that economic integration in each case is essentially a process of replacement of national markets and domestic division of labour, respectively, by global markets and international division of labour. That is, despite its various facets, economic integration, first and foremost, means expansion and unification of the markets, as well as all that are concomitant thereupon. But expansion and unification of the market, of course, does not come out of the blue. It materializes, often gradually, through numerous real and financial linkages, and consequently results in co-movement, one way or another, of measurable macro variables. The most obvious real linkage is trading between economies, or different parts/regions of the same economy.2 Physical goods and services are not the only things that are traded. So are ideas and technologies. Of course, diffusion

A NOTE ON THE SUBSTITUTION PROCESS AS AN INTERACTIVE MARKOV CHAIN

An interactive Markov chain model of multilevel substitution process is presented and discussed briefly. An upper triangular matrix, whose elements on and above the main diagonal are the transition probabilities arranged in some order, is proposed as a criterion matrix for the monotonicity of the transition matrix.