Sugata Marjit

Foreign Capital and Protectionism

In terms of a simple model, it is shown that the growth in the export processing zone through an influx of foreign-owned capital reduces welfare for an economy importing capital-intensive goods and following a protectionary policy. Similarly, it follows that growth in the export-processing zone should benefit economies importing labor-intensive goods.

Economic reform and informal wage--a general equilibrium analysis

Abstract We attempt to trace the consequences of liberal economic policies on informal wage in a general equilibrium model with formal informal labor markets, wage-differential, vertical linkage and restricted capital movement. In particular, we show that the informal wage, representing income for a vast segment of unskilled labor may actually increase even if more people are employed in the informal segment. This also confirms that a contraction in the formal sector employment and the consequent expansion in the informal segment do not necessarily imply impoverishment of the existing set of informal workers.

On a non-cooperative theory of technology transfer

Abstract This paper shows that it might be profitable for a firm with advanced technology to sell the knowledge to a competing firm with less efficient technology and still remain in the business. A non-corperative equilibrium with technology transfer may Pareto-dominate the initial equilibrium without technology transfer. In this paper it is shown that technology agreement is likely to occur between firms which are reasonably close in terms of their initial technologies. Such an equilibrium is an interesting possibility in the absence of credibly sustainable collusive outcomes.

Protecting consumers through protection: The role of tariff-induced technology transfer

Abstract We consider a duopolistic trade model where a tariff induces the foreign firm to transfer its superior technology to the domestic rival. Contrary to the conventional wisdom, such a tariff raises consumers’ surplus relative to the free trade situation. We characterize the optimal tariff with and without precommitment on the part of the local government. Possibility of technology transfer reduces the optimal tariff rate compared to the no-transfer situation.

International technology transfer under potential threat of entry: A Cournot-Nash framework☆

Abstract This paper analyses the possibility of technology transfer from a technologically advanced foreign firm to a domestic firm of a less-developed country when the product market is characterized by Cournot-Nash competition. The foreign firm is not allowed to enter the home market by a prohibitive tariff but the backward firm may not face any such resistance in the foreign markets. This means that technology transfer, under this situation, involves potential threat of competition from the latecomer. It is shown that by designing a suitable payment policy the host-country government can induce the foreign firm to transfer the ‘best’ technology. However, there are possible equilibria where ‘worse-than-the-best’ technologies are transferred.

On controlling crime with corrupt officials

Abstract This paper attempts to synthesize the recently developed strategic approach towards modeling corruption and the classical views. The following propositions are sought to be proved: (a) If reward schemes are introduced, the classical and the strategic approaches yield similar results so far as controlling crime is concerned; (b) With probability of detection being dependent on the effort of a corrupt official, crime cannot be controlled; and (c) In the context of an infinitely repeated game of crime, the corrupt law enforcing agent might choose less bribes and lower effort level than the myopic optimal and hence would strategically pamper crime.

Harassment, corruption and tax policy

This paper introduces ‘harassment’ in a model of bribery and corruption. We characterize the harassment equilibrium and show that taxpayers, with all possible levels of income, participate in such equilibrium. Harassment has a regressive bias. Harassment costs as such may not affect tax revenue. However, when the decision to file tax returns is endogenized, harassment cost can affect the filing pattern and, hence, the revenue collection. We study the nature of the equilibrium under imperfect information when different types of taxpayers and auditors are introduced in the system.

Protection and the gainful effects of foreign capital

An increased foreign capital inflow into a protected sector is generally immiserizing. We show that if the protected sector produces an intermediate input, positive welfare effects may emerge. A striking result is that it might lead to an increased import-demand for the intermediate input which is a substitute for the product of the import-competing sector.

Incentives for cooperative and non-cooperative R and D in duopoly

Abstract This paper tries to explain why duopolistic firms would like to enter cooperative R and D venture even when they would act non-cooperatively in the product market. We show that both ‘very high’ and ‘very low’ probabilities of success in R and D can induce firms to go for R and D joint ventures. This research highlights the modus operandi for cooperative research even without and ‘spillover’ of individual R and D and/or with a reasonably ‘low’ sunk cost of R and D.

International Trade and Endogenous Production Structures

No single production structure has become dominant in models of the pure theory of international trade, even those characterized by perfect competition. Most models are represented by Ricardian, Heckscher-Ohlin, or Specific-Factors structures, or variants and combinations of these, with the selection often dictated by the problem being investigated. However, it is well known that if a country is freed from the bonds of autarky and allowed to engage in trade in goods or factors, a certain degree of specialization is encouraged so that the production structure with trade can differ significantly from that postulated in autarky. In that sense production structures are endogenously affected by trade.