Larry D. Qiu

The North's Intellectual Property Rights Standard for the South?

We build a multi-sectoral North-South trade model to analyze international intellectual property rights (IPR) protection. By comparing the Nash equilibrium IPR protection standard of the South (the developing countries) with that of the North (the developed countries), we find that the former is naturally weaker than the latter. Moreover, we show that both regions can gain from an agreement that requires the South to harmonize its IPR standards with those of the North, and the North to liberalize its traditional goods market. This demonstrates the merits of multi-sectoral negotiations in the GATT/WTO.

Policy on international R&D cooperation: Subsidy or tax?

In this paper we derive the non-cooperative, optimal policy towards international RD moreover, we show that the optimal policy is subsidy regardless of the strategic nature (substitute or complement) of the strategy variables, a result that contradicts the traditional wisdom. ( 1998 Elsevier Science B.V. All rights reserved.

Interregional protection: Implications of fiscal decentralization and trade liberalization

Abstract Empirical studies have shown that regional markets in China are highly fragmented. The observation leads to the conclusion of interregional trade protection. In this paper, we develop a model in which a country has two regions and faces import competition to examine how and when interregional trade protection may arise. We find that domestic fiscal decentralization, particularly tax reform, together with high external trade protection, cause interregional protection. This finding, which is generalizable, not only helps explain the rise of interregional protectionism in China but also predicts that external trade liberalization, particularly the countrys WTO accession, can help tear down existing interregional trade barriers.

FDI Policy, Greenfield Investment and Cross‐border Mergers

This paper examines a multinationals choice between greenfield investment and cross‐border merger when it enters another country via foreign direct investment (FDI) and faces the host countrys FDI policy. Greenfield investment incurs a fixed plant setup cost, whereas the foreign firm obtains only a share of the joint profit from a cross‐border merger under the restriction of the FDI policy. This trade‐off is affected by market demand, cost differential, and market competition, among other things. The host countrys government chooses its FDI policy to affect (or alter) the multinationals entry mode to achieve the maximum social welfare for the domestic country. We characterize the conditions shaping the optimal FDI policy and offer intuitions on FDI patterns in developing and developed countries.

Why can't countervailing duties deter export subsidization?

Abstract This paper shows that in a duopoly model of international market competition, threatened imposition of countervailing duties by a domestic country generally deters a foreign country from subsidizing its exports to the former. To explain the coexistence of export subsidization and the GATT-conform countervailing duty measures, factors such as delay in retaliation, the GATT constraint on the amount of countervailing duties, and voluntary export restraints must be considered. We find that these factors lessen the efficacy of countervailing duty retaliation and therefore fail to deter export subsidization.

Protection of trade for innovation: the roles of Northern and Southern Tariffs

Abstract Using a North–South trade model with innovation and imitation, we investigate the interaction of intellectual property rights (IPR) protection and trade protection. We show that unlike a Southern tariff, a Northern tariff supplements IPR protection and is not necessarily a beggar-thy-neighbor policy. The globally optimal Northern tariff increases as IPR protection in the North or the South decreases. Global welfare may rise as Northern tariff increases, but necessarily declines as Southern tariff increases. This suggests that pushing for freer trade in the South is more urgent than in the North in innovation-intensive sectors where IPR protections are weak in both regions.

Do Technical Barriers to Trade Promote or Restrict Trade? Evidence from China

The use of technical barriers to trade (TBT) is widespread and has increasing impact on international trade. In contrast to most other trade measures, TBT have both trade promotion and trade restriction effects. Due to their theoretical complexity and data scarcity, TBT have been considered as one of the most difficult non-tariff barriers (NTBs) to quantify. In this paper, we construct a TBT database from 1998–2006 to examine the influence of TBT imposed by China on the countrys imports. When using the frequency index, we find that TBT are trade restrictive: a one unit increase in TBT will decrease import value by about 0.8%. However, when the coverage ratio is used, we find that the negative effects of TBT are not statistically significant based on the entire period. However, if the focus is shifted to data from 1998–2001, we find that TBT have trade promotion effects. A one unit increase in TBT will increase import value by about 0.2%. Finally, Chinas TBT (measured by both frequency index and coverage ratio) are trade restricting for agriculture goods but trade promoting for manufacturing goods.

Anti-dumping measures as a tool of protectionism: A mechanism design approach

In this paper we explore the design of optimal incentive-compatible anti-dumping (AD) measures. When the weight given to the domestic firms profit in the governments objective function is relatively small, it is shown that no AD duty should be imposed if the foreign firm reports its own costs, but a constant AD duty should be imposed if the domestic firm reports the foreign firms cost. When this weight is large, in either case of reporting the AD duty is a prohibitive tariff. The optimal AD measures are modified in the presence of a GATT/WTO constraint.

Who invests more in advanced abatement technology? Theory and evidence

We study firm investment in abatement technology under a heterogeneous-firm framework. We find that more-productive firms make more (less) investment in abatement technology if investment and productivity are complements (substitutes). Under linear demand, firms abatement investments exhibit an inverted U-shape with respect to productivity level. This finding is in contrast to results in existing studies. We also find that in response to tightened environmental regulations, more-productive firms raise their respective investments in abatement technology, whereas less-productive firms do the opposite. More-productive firms have lower pollution emission intensity. The key theoretical predictions are confirmed by empirical tests using Chinese data.

Endogenous Lobbying Positions

This paper develops a two-country, two-firm model to study equilibrium lobbying positions in intra-industry trade. A firm chooses either a protectionist position or a free-trade position. The model predicts that taking the free-trade lobbying position is an efficient firms dominant strategy. If two firms have high costs (or when the demand is very weak), there exist two equilibria: either both firms take the free-trade position or both take the protectionist lobbying position. In other cases, both firms taking the free-trade lobbying position is a unique equilibrium.