Rajat Acharyya

Monopoly and product quality: Separating or pooling menu?

Abstract This paper points out that without restrictions on the cost function, distribution of consumer types, and on the extent of market coverage, the standard parameterization of preferences cannot by itself guarantee that a monopolist would choose a separating menu. Moreover, there may not be any quality distortion.

International Trade, Wage Inequality and the Developing Economy

1: Introduction.- I Evidence and the Debate.- 2: Wages and Employment.- 2.1 Country Experiences.- 2.2 The Wage-Gap Debate: Trade or Technology?.- 2.3 Issues: What Do We Need to Address?.- II Explaining Symmetric Wage-Gap.- 3: The Standard Trade Theory:How Far Does It Go?.- 3.1 Introduction.- 3.2 Trade and Income Distribution in the HOS Model.- 3.3 Specific-Factor Model of Trade and Income Distribution.- 3.4 Conclusion.- 4: Trade Liberalization and Symmetric Wage-Gap.- 4.1 Two Cases.- 4.2 Generalized HOS Model,Trade Pattern and the Wage-Gap.- 4.3 Local Factor Abundance andAsymmetric Changes in Wages in the South.- 4.4 Rigid-Wage Specific-Factor Model.- 4.5 Conclusion.- 5: Input Trade: An Alternative Explanation.- 5.1 Introduction.- 5.2 Trade in Intermediate Products.- 5.3 Factor Mobility: How Far Does It Explain?.- 5.4 Conclusion.- III Trade, Capital Flow and Employment.- 6: Liberalization and Employmentin the Organized Sector.- 6.1 Introduction.- 6.2 The Existing Literature.- 6.3 Tariff, Foreign Investment andEmployment in a Dual Economy.- 6.4 General Equilibrium Analyses of Unemployment.- 6.5 Employment and Welfare.- 6.6 Conclusion.- IV Trade Liberalization, Wage Inequality and Employment in the South.- 7: Diverse Trade Pattern,Complementarity and Fragmentation.- 7.1 Diverse Trade Pattern of Southern Countries.- 7.2 Complementarity and the Wage-Gap.- 7.3 Liberalization and Employment.- 7.4 Fragmentation and the Wage-Gap.- 7.5 Terms of Trade, Fragmentationand Wage Inequality.- 7.6 Conclusion.- 8: Segmented Input Marketsand Non-Traded Good.- 8.2 Informal Capital Marketand Restricted Capital Mobility.- 8.3 Role of the Non-Traded Good.- 8.4 Conclusion.- 9: Trade, Skill Formation and the Wage-Gap.- 9.1 Introduction.- 9.2 Skill Differentiation, Underemploymentand Wage Inequality.- 9.3 Skill Formation and Wage Inequality.- 9.4 Conclusion.- 10: Conclusion.- List of Figures.- List of Tables.

Export diversification, composition, and economic growth: Evidence from cross-country analysis

We investigate the export-growth relationship at disaggregate levels – disaggregation both at the country level and at the level of exports – focusing on the diversification and the composition of exports of countries. In a sample of 65 countries for the period 1965–2005 the dynamic panel estimation reveals that both diversification and composition of exports are important determinants of economic growth after controlling for the impacts of other variables like lagged income, investment, and infrastructure. There is a critical level of export concentration beyond which increasing export specialization leads to higher growth. Below this critical level, diversification of exports matters for gross domestic product (GDP) growth. Growth of high technology exports also contributes tothe output growth; the relationship becomes stronger for countries that have share of manufacturing exports in their total exports greater than the world average. These results are robust even when the dataset isclassified in four sub-panels based on the export-economic growth relationship.

Trade Liberalization, Skill‐linked Intermediate Production and the Two‐sided Wage Gap

Abstract A rising wage‐gap, almost universally, in the last two decades has contradicted the age‐old conventional wisdom of asymmetric wage movements across nations when trade is liberalized. We offer an explanation that fits well with the emerging trade pattern between the developed and more advanced developing countries like India and Mexico. We argue that a tariff reduction in the South on imports of an intermediate good from the North may raise the wage‐gap in both the North and the South. The price of the intermediate good moving in different directions and different factor‐intensity‐ranking of this good relative to the two different final goods produced in the two countries underlie this result. Rising wage inequality may specially affect the South because educational expenses and infrastructure do not allow ready transformation of the vast masses of unskilled workers into skilled workers. Hence, the policy lesson of the paper seems to be more public effort in arranging for smoother acquisition of human capital by the unskilled.

PARALLEL IMPORTS, INNOVATIONS AND NATIONAL WELFARE: THE ROLE OF THE SIZES OF INCOME CLASSES AND NATIONAL MARKETS FOR HEALTH CARE

This paper shows that regardless of any intra-country income differences, parallel imports result in a lower level of health-care innovation but, contrary to popular as well as conventional theoretical wisdom, a lower price in the Third World compared to market-based discrimination. Despite such a lower price, however, parallel imports unambiguously make all buyers in the Third World worse off when intra-country income disparity exists. On the other hand, even discarding the MNCs profit, there will be cases in which the richer country prefers price discrimination as well. That is, in those cases, no countries will have any incentive under the welfare criterion to undo price discrimination, contrary to Richardson (2002).

Export quality and income distribution in a small dependent economy

Abstract This paper provides a simple general equilibrium structure to analyze the two-way causation between choice of export quality by a small open economy and domestic income distribution. The important policy conclusion of our analysis is the following: When direct quality regulations are costly to impose or may not have desirable consequences for income distribution, the target level of export quality may be met through appropriate direct and indirect income redistribution policies such as wage policies or standard trade policies.

To Liberalize or Not to Liberalize an LDC-Market with an Inefficient Incumbent

Abstract This paper examines the strategy choices of an efficient foreign entrant competing with an inefficient local incumbent in an erstwhile protected LDC-market. In terms of a two-stage trade liberalization game it is demonstrated that the LDC-market size, convexity of demand function, the initial technology gap and the trade policy determine whether the foreign entrant accommodate the incumbent by licensing its superior technology or throw it out of the market by limit-pricing. The optimal trade policy and the subgame perfect equilibrium of the game therefore depend on these market-structure conditions.

Parallel imports, drug innovation and international patent protection: A policy game

We consider a policy game between a high-income country hosting a drug innovator and a low-income country hosting a drug imitator. The low-income country chooses whether to enforce an International Patent Regime (strict IPR) or not (weak IPR), and the high-income country chooses whether to allow parallel imports (PI) of on-patent drugs or market-based discrimination (MBD). We show that, for a moderately high imitation cost, both (strict IPR, PI) and (weak IPR, MBD) emerge as the subgame prfect Nash equilibrium (SPNE) policy choices. For relatively smaller imitation costs, (weak IPR, MBD) is the unique SPNE policy choice. The welfare properties reveal that although innovation may be higher at the (strict IPR, PI) policy regime, the market coverage and national welfare of the low-income country, and the total welfare are all lower. This opens up the efficiency issue of implementing TRIPS and at the same time allowing international exhaustion of patent rights.

Environmental standard and employment: impact of productivity effect

This paper analyses the effect of environmental standards on aggregate employment in the presence of a productivity effect in a multi-sector general equilibrium framework of an open economy. The productivity effect is generated among the skilled and unskilled workers as an improvement in the environmental quality improves their health, leading to an increase in their productivity. Though the productivity effect initially lowers labour demand as labour requirement per unit of production falls, a standard may raise employment depending on the parametric configurations. In this paper, we identify the role of this productivity effect on the change in employment and show that it may actually improve the chances of an employment expansion.

International trade and economic development

This graduate textbook offers advanced and contemporary readings in international trade and economic development and provides an overview of the fundamental topics in this area. It brings together many of the issues that are considered staple reading for a course in trade and development and it offers a systematic coverage of the relevant and state of the art research on various aspects of the subject. This includes detailed analysis of important sub-topics such as: trade and labour market, trade and public economics, the theory of the second best, foreign aid, factor mobility, and regional and global welfare. It also covers international trade and labour standards, the informal labour market, and TRIPS. Aimed at post-graduate students interested in trade theory and applications in development issues, this book should also prove a valuable resource for practicing economists, policy makers, and advanced undergraduate students studying international trade. The text balances extensive coverage of available literature in the area with substantive inclusions from new research published in leading journals and volumes. It aims to fill the gap in the teaching resources and should promote further theoretical and empirical research in the subject.