Nicolas Schmitt

Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation

This paper explicitly takes into account the dynamic oligopolistic rivalry among source producers to evaluate the degree of exchange rate pass-through. Using recent time-series techniques for the case of imported automobiles in Switzerland, the results show that prices are strategic complements and that the degree of pass-through is lower in the long run than in the short run. We attribute this to the fact that, although some rivals match long-term price changes, others do not, inducing the producer who faces a change in exchange rate to absorb a greater proportion of the variation.

Who Benefits from Antidumping Legislation

Abstract Antidumping laws alter the pricing policies of foreign firms to the benefit of domestic ones. Unilaterally, domestic firms want to lobby for antidumping restrictions; unilaterally, consumers want to lobby against them. This paper shows that if firms succeed in both countries, their profits fall and consumer surplus rises, so that firms end up working for consumers everywhere by lobbying. It also shows that each government, maximizing total domestic surplus, prefers no legislation irrespective of the action of another government. However, world surplus may be greater with antidumping rules. These results hold under both Bertrand and Cournot competition.

Economies of scale and the volume of intra-industry trade

Abstract Using a model of monopolistic competition with traded and non-traded goods, this paper establishes a positive link between scale economies, the volume of intra-industry trade and the share of trade in total production. These results are consistent with empirical findings.

The Role of Cultural Clustering in Attracting New Immigrants

This paper argues that new immigrants cluster in culturally homogeneous groups in the host country because of imperfect information. However, a pulling effect exists provided that the cultural communities are not too large. With a panel of migration flows to the major O.E.C.D. countries from the mid 1980s to the mid 1990s, it is shown that the existence of similar cultural communities attracts new immigrants. However, the effect is not homogeneous for all types of source and destination countries. Furthermore, the pulling effect is shown to fall to zero for cultural communities above a certain threshold size. Copyright Blackwell Publishing, Inc 2003

Quality competition and threat of entry in duopoly

Abstract Threat of entry, sequential entry and cost of production are taken into account in a duopoly game in quality within the vertical product differentiation framework. A multi-stage perfect equilibrium solution is shown to exist and is fully characterized.

Temporary Foreign Workers and Regional Labour Market Disparities in Canada

Temporary foreign worker programs are typically seen as short-term solutions to shortages of regional or occupational labour. During the past decade, Canadian regions experienced unequal economic growth, and some suffered from significant excess labour demand. The Canadian Temporary Foreign Worker Program was thus expanded and conditions to access it made easier. During the same period, the pattern of regional disparities in unemployment rates became more persistent. This paper shows that some of the persistence is due to the increased availability of temporary foreign workers. This suggests that policy makers did not price them correctly to avoid adverse effects on the Canadian labour market.

Imports and the structure of retail markets

We construct a model of trade with heterogeneous retailers to examine the effects of trade liberalization on retail market structure, imports and social welfare. We are especially interested in investigating the transmission of lower import prices into consumer prices and the effects of retail market regulation. The paper shows that changes in import prices may have large effects on consumer prices and import volumes when changes in retail market structure are taken into account, and that restrictions on retailing, as they occur in several countries, may significantly alter this transmission mechanism by reducing imports and raising consumer prices.

Exchange rate pass-through and rivalry in the Swiss automobile market

Exchange Rate Pass-Through and Rivalry in the Swiss Automobile Market. —This paper investigates the pricing rivalry among foreign automobile producers in the Swiss market. The main results from the dynamic analysis of two categories of automobiles between 1977 and 1991 are: First, the degree of exchange rate pass-through differs among source-countries despite the absence of quantitative restrictions on imports and of domestic production facilities. However, for some countries, pricing strategies show remarkable consistency across product categories and time spans. Second, the degree of exchange rate pass-through is low, especially in the market for small-size automobiles. Third, this low degree of pass-through may be attributed to a low degree of competition among foreign sellers.ZusammenfassungWeitergabe der Wechselkursschwankungen und Wettbewerb auf dem Schweizer Automobilmarkt. —Die Verfasser untersuchen das Preisverhal-ten ausländischer Automobilhersteller auf dem Schweizer Markt. Aus der dynamischen Analyse zweier Kategorien von Automobilen zwischen 1977 und 1991 ergeben sich als Hauptresultate: Erstens differiert das Ausmaß, in dem Wechselkursschwankungen wei-tergegeben werden, nach dem Ursprungsland, obwohl es keine quantitativen Importbe-schränkungen und keine heimischen Produktionsmöglichkeiten gibt. Allerdings erwei-sen sich für einige Länder die Preisbildungsstrategien unabhängig von Produktkategorie und Zeitspanne als bemerkenswert gleichförmig. Zweitens ist das Ausmaß der Weiter-gabe von Wechselkursschwankungen niedrig, besonders auf dem Markt für Kleinwagen. Drittens könnte dieses geringe Ausmaß der Weitergabe darauf zurückzuführen sein, daß der Wettbewerb zwischen ausländischen Verkäufern schwach ist.

Two-Country Trade Liberalization in an Address Model of Product Differentiation

This paper investigates the effects of reciprocal tariff reductions in a two-identical country model of product differentiation. It makes three points. First, the existing results about market structure effects of trade liberalization can easily be replicated from a one-dimensional characteristic space model in which the prohibitive tariff rate is endogenously determined. Secondly, these effects depend crucially on the initial ad valorem tariff rate. Thirdly, reciprocal tariff reductions alone do not necessarily warrant welfare gains.

Product Imitation, Product Differentiation and International Trade

Using the Hotelling approach to product differentiation, this article derives the equilibrium product configurations and prices when two firms enter and sell in two interdependent markets separated by barriers to trade. It shows that product imitation and no trade as well as product differentiation with two-way or one-way trade are all consistent with the equilibrium. Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.