Optimal trade policy. Lashkaripour and Lugovskyy (2023) and Bartelme et al.

Optimal trade policy Helpman and Krug- Request PDF | Optimal trade credit coordination policy in dual-channel supply chain with consumer transfer | The boom in online sales has inspired the enthusiasm of manufacturers to include their 1 “Second-best” is used to indicate non-Pareto optimal situations. Another perspective on this result is that the potential to manipulate the terms of trade hinges on the trade elasticity, whereas the degree of resource misallocation is influenced by Optimal trade policy with monopolistic competition and heterogeneous firms Jan I. The main advances in this area are twofold. Comparative Advantage and Optimal Trade Policy. After a comprehensive analysis of the proposed model, we find that an optimal emission permit level, which increases in carbon penalty and decreases in carbon price, exists in each The results suggest that (a) a country that has an inefficient level of unemployment may experience welfare losses from free trade; (b) having search‐generated unemployment is not sufficient to justify a use of trade policy, because free trade is still optimal when the labor market is constrained‐efficient; and (c) a small country that has Augustine H. (2016)). (2013) as well as Caliendo et al. Yet we know little about its implications for how nations should conduct their trade policy. ,Babiker(2005),Elliott et al. The market supply and demand get adjusted over time until the post-policy equilibrium arrives. An optimal trade facilitation policy subject to a cost constraint has been derived, which minimizes the efficiency losses on the adjustment path. We show that optimal policies capture a dynamic motive for a country to alter global Request PDF | Optimal trade credit coordination policy in dual-channel supply chain with consumer transfer | The boom in online sales has inspired the enthusiasm of manufacturers to include their Comparative Advantage and Optimal Trade Policy. "Optimal trade policy with monopolistic competition and heterogeneous firms," CEPR Discussion Papers 10219, C. 3386/w19689 Issue Date December 2013. The process of innovation and diffusion is one in which new ideas are combined with insights from others. Keywords: trade policy; monopolistic competition; heterogeneous firms; terms of trade; variety; productivity. When all output is exported, optimal policy with a single home firm "Geography, competition and optimal multilateral trade policy," CEP Discussion Papers dp1610, Centre for Economic Performance, LSE. There are three such margins in this model. 49. This paper examines strategic trade policy for differentiated network-goods oligopolies under alternative scenarios when there is export-rivalry between two countries. 3. Venables, Anthony & Haaland, Jan I. a labor-abundant country). Our main result can be stated as follows. 1 Introduction In quantitative finance area, optimal trade execution (OTE), also called optimal liquidation, is a critical issue in many investment activities [7,16,19,24]. effect of trade policies on unemployment. , Optimal trade and capital control policies are characterized under a dynamic model with endogenous trade imbalances. R. Demidova A. “Comparative Advantage and Optimal Trade Policy. DL-opt integrates (i) a nested fixed point (NFXP) formulation of the optimization problem, (ii) automatic implicit differentiation to enhance gradient descent for solving unilateral optimal policies, and (iii) a best-response In this paper we provide an integrative treatment of the welfare effects of trade and industrial policy under oligopoly, and characterize qualitatively the form that optimal intervention takes under a variety of assumptions about the number of firms, their conjectures about the response of their rivals to their actions, the substitutability of their productsand the markets in which they are sold. Haaland Norwegian School of Economics Anthony J. g. edu October 21, 2018 Abstract In this paper, we explore the relationship between optimal trade and redistributive poli- The final part of the analysis then investigates optimal trade policy for a small open economy in the competitive equilibrium. Abstract: The theory of comparative advantage is at the core of neoclassical trade theory. Tap into our powerful connections, maximise profits, and leverage shared learning. Arnaud Costinot, Dave Donaldson, Jonathan Vogel & Ivan Werning. No 32097, NBER Working Papers from National Bureau of Economic Research, Inc Abstract: We study optimal dynamic trade policies in an Eaton-Kortum model with technology diffusion through trade. It is optimal trade policy in a world economy comprising two coun-tries: the United States and the Rest of the World. Bagwell and Lee,2020). Y1 - 2016/9. First, there has been substantial progress in understanding optimal trade policy in a variety of neoclassical and ship between comparative advantage and optimal trade policy. Ottaviano & Matteo Salto, 2019. New ideas are combined with insights from others. Motivated by the threat of job losses and welfare losses due to international trade, I characterize the condition in which it is optimal to use trade policies to protect domestic workers. ” The Quarterly Journal of Economics 130, no. However, optimal trade policy and equilibrium trade imbalances move together when a country grows consistently faster or slower than the rest of the world. Free trade is optimal only when a labor market is initially efficient. Save. , 2014. (2015) { also Stokey and Lucas (1983) 1 First, solve the planner problem to characterize optimal allocation 2 Characterize market equilibrium with taxes and study how to implement the rst best The market supply and demand get adjusted over time until the post-policy equilibrium arrives. trade policy around the time of the Smoot-Hawley tariff of 1930, a period when policy was unconstrained by trade agreements. • GT under optimal trade taxes are 20% and 33% larger than under no taxes • GT under under optimal uniform tariff are only 9% larger than under no taxes • Micro-level heterogeneity matters for design and gains from optimal trade policy We then turn to the normative analysis of trade policy, and in Section 4, we discuss recent theoretical tools and results related to optimal unilateral trade policy. Under very general conditions, we show that from the point of view of a country that unilaterally imposes trade taxes to maximize domestic welfare, the self-selection of heterogeneous firms into exports calls for import subsidies on the least profitable G. Technological Rivalry and Optimal Dynamic Policy in an Open Economy Yan Bai University of Rochester NBER Keyu Jin LSE Dan Lu * The Chinese University of Hong Kong Preliminary Draf "Optimal Trade Policy With Monopolistic Competition and Heterogeneous Firms," Economics Series Working Papers 782, University of Oxford, Department of Economics. We study optimal dynamic trade policies in an Eaton-Kortum model with technology diffusion through trade. ship between comparative advantage and optimal trade policy. (2021) characterize optimal trade and industrial policies using sufficient statistic approach. 7 Our analysis contributes to three main literatures. This is particularly so in order to understand the pattern of optimal trade taxes over the business cycle and the potential relationship between the growth rate of the economy in perspective, the average gains from optimal trade policy that we estimate in the same environment are equal to 0. Keywords: Optimal Trade Policy, Employment, Gains from Trade, Heckscher-Ohlin. Bilateral trade costs are The aim of this paper is to study optimal trade policy in a version of the Krugman (1980) model of intra-industry trade due to monopolistic competition and increasing returns. our paper introduces strategic interactions into a Ricardian model a` la This study considers a differentiated duopoly, including domestic and foreign enterprises, in trade, analyzes the impacts of product differentiation and productivity variance on equilibrium results, and explores the optimal trade policy in different competition modes. Lashkaripour and Lugovskyy (2023) and Bartelme et al. At the micro-level, we find that optimal import taxes discriminate against the most profitable foreign exporters, while optimal export In this article, we propose an end-to-end adaptive framework for optimal trade execution based on Proximal Policy Optimization (PPO). It is the first work in the field to examine trade policy in an integrated theoreti-cal framework based on optimizing dynamic models that pay careful Also, unlike results regarding strategic trade policy with asymmetric costs, optimal policy for a government when technology licensing is possible is neither necessarily (a) higher in absolute We also discuss how optimal trade policy is shaped by the presence of multiple sectors, intermediate goods, and supply-chain linkages. We find that differentiated products can boost the supply of foreign enterprises in a Cournot competition. X LinkedIn Email. "Geography, competition and optimal multilateral trade policy," CEP Discussion Papers dp1610, Centre for Economic Performance, LSE. (2015), suggests that international trade and global reallocation of production has contributed to domestic reallocation of labor and income inequality. These policies take into In the realm of strategic trade policy, Ghosh and Saha (2008) explore the impact of subsidies on licensing decisions and payments in a quantity competition setting with asymmetric costs, showing that optimal policy can sometimes be an export tax rather than a subsidy. Trade thus affects technology by determining the distribution from which producers draw their insights. Quantifying the model for the U. Discussion Papers. Share. These policies take into account selection effects, country endowments, and other Wang, and Zhu (2024) characterize optimal trade and industrial policies, in the U. all attempt to analyze optimal trade policy for network goods oligopoly. e. Trade affects technology by determining the distribution from which potential producers draw their insights. The theory of comparative advantage is at the core of neoclassical trade theory. NBER charges a fee of $5. In the former case domestic T1 - Optimal trade policy with monopolistic competition and heterogeneous firms. JEL classification: F12, F13 Optimal trade credit and replenishment policies for supply chain network design optimizing trade credit policy can help achieve significant cost savings compared to the traditional network design model. I argue, in contrast, that democracy has contradictory effects on different types of trade policies because electoral competition generates more information about some than about others. Our theory shows that optimal policies capture a dynamic motive for a country to alter global technology. η ∈ [0 , ∞ ) , μ ∈ [0, 1]). PY - 2016/9. Trade affects technology by determining the distribution from which the design of optimal trade policy when heterogeneous firms select into exporting. We can solve analytically for optimal trade policy for a Small Open Economy Follow the primal approach in Costinot et al. Yet we know little about its implications for how nations cuses on optimal trade policies restricted to a single or limited set of goods or examines trade policies that apply uniformly across sectors (Itoh and Kiyono,1987;Opp,2010;Ossa,2014; 2See their footnote 8. S. The main building blocks are taken from Melitz(2003). JEL classification numbers: F11, F13, F16, F66, J64 "Geography, competition and optimal multilateral trade policy," CEP Discussion Papers dp1610, Centre for Economic Performance, LSE. As pointed out by Caliendo and Parro(2021), characterizing optimal trade policy in current trade modes is challenging, but the literature has introduced new methods and new insights. Each firm produces a single product that may be a perfect or imperfect sub- Alternatively, some firms have a partial-trade-in-return (PTR) policy under which trade-in consumers who return a newly purchased product only receive a refund for the amount of money they paid (without including the trade-in-rebate). We show that optimal policies capture a dynamic motive for a country to alter global Yet, it has had surprisingly little impact on how economists think about trade policy. Economic Environment Consider a world economy with 2 countries, c = 1,2 There are two goods, i = 1,2, both produced under perfect competition good 2 is Pareto-optimal, the optimal non-cooperative trade policy consists of a positive import subsidy (export tax) that improves domestic terms of trade, instead of a tari (subsidy). Perhaps surprisingly, II. 95% of GDP. N2 - This paper derives optimal trade and domestic taxes for a small open economy containing a monopolistically competitive (MC) sector in which firms may have heterogeneous productivity levels. Rodrı́guez-Clare. Submit & Leave (SL) policy (as baseline), the Q-learning algorithm, and the latest hybrid method that combines the Almgren-Chriss model and reinforcement learning. Optimal Trade Policy with Firm Heterogeneity Arnaud Costinot MIT Andrés Rodríguez-Clare UC Berkeley Iván Werning MIT April 2020 Abstract The empirical observation that “large firms tend to export, whereas small firms do not” has transformed the way economists think about the determinants of interna-tional trade. P. The paper examines the nature of optimal policy intervention required in the exporting country when there is the possibility of a market-disruption-induced trade restriction being invoked by the importing country. The Home country’s government has three instruments at its disposal: import and export taxes – potentially different across different goods – and capital controls Optimal Trade Policy and Production Location Ayako OBASHI* Toyo University September 2016 Abstract: This paper studies the role of trade policies in a theoretical framework considering the firm’s global production operation subject to trade costs. In this paper, we characterize optimal trade policy in a generalized version of the trade model with monopolistic competition and firm-level heterogeneity developed by Melitz (2003). In this paper, we characterize optimal trade policy in a general-ized version of the trade model with monopolistic competition and firm-level hetero-geneity developed byMelitz(2003). Our theory shows that optimal policies capture dynamic motives for a country to alter global technology. Inequality, Redistribution and Optimal Trade Policy: A Public Finance Approach∗ Roozbeh Hosseini University of Georgia Federal Reserve Bank of Atlanta roozbeh@uga. We consider a model of politically-optimal trade policy for a large country that can influence its terms of trade and where workers and firms lobby for protection. T ©Ô»Ýz_ü Ý^¯¢4ôo¯‹ÐïõÖðçÇ®¶å#ÏßÛÑîõ(;7µmŽ •n÷æŸ× ÜþÄש HÓˆ®KŠ I•·Šã +r¾íµîí–ObÚ_«Üïî*Kǽ• â,Á Iœ0ü‹n ;!ð ing optimal trade policy and show that our main insights are robust. S. We theoretically characterize optimal dynamic trade policies, and Our goal in this paper is to explore the relationship between inter-temporal trade and optimal trade policy. The adjustment of price is based on the lack of coordination among agents at the existing prices. At the first best policy optimum (top rows of each part of the table) we can think of each instrument being targeted at a particular margin where welfare gains can be achieved. This study considers a differentiated duopoly, including domestic and foreign enterprises, in trade, analyzes the impacts of product differentiation and productivity variance on equilibrium results, and explores the optimal trade policy in different competition modes. Antonella Nocco & Gianmarco I. 1 Examples of optimal trade taxes include (i) a zero import tar- Yet we know little about its implications for how nations should conduct their trade policy. In particular, in an environment where us understand the implications of imperfect competition on optimal trade policy in a variety of scenarios. Our key finding is that optimal import We analyze the welfare effects of trade and industrial policy under oligopoly, and characterize optimal intervention under a variety of assumptions about mar- ket structure and conduct. Examples of optimal trade taxes include (i) a zero import tariff The standard results of Brander and Spencer assert that (1) the subsidy is always the optimal trade policy instrument, (2) the SPNE of the governments’ game is always the subsidy policy, (3) exporters’ profits are always higher with the subsidy policy, and (4) social welfare is greater under free trade (resp. 6 We calibrate the model to 20 countries, including the nineteen largest countries, based on their GDP in 2016, and the rest of the world. This is a National Bureau of Economic Research Paper. 00 for this paper. Trade affects technology by determining the distribution from which producers draw their insights. Venables 12th November 2014 Abstract This paper derives optimal trade and domestic taxes for a small open economy containing a monopolistically competitive (MC) sector in which firms may have heterogeneous productivity levels. Study with Quizlet and memorize flashcards containing terms like Ricardo's trade theory supports _____as the optimal trade policy, in contrast to Mercantilism, which supports _____ as the optimal trade policy, Suppose that there are only two countries in the world (France and Germany); two products (Cheese and Cars) and 1 factor of production (Labor). MICRO TO MACRO: OPTIMAL TRADE POLICY 3 Optimal Taxes. For example, should import sectors with weaker comparative advantage be protected more? Dave Donaldson, Jonathan Vogel, and Iván Werning. The term is unattractive when applied to trade policies in which the absence of perfect competition excludes the “first-best” policy because it implies that policymakers are failing to find a superior policy when in fact the choice is among policies that are not first Yet, it has had surprisingly little impact on how economists think about trade policy. , 2017], and it becomes one of the most popular RL methods due to its state-of-the-art perfor-mance as well as its sample efficiency and easy implementa-tion. Venables University of Oxford Abstract This paper derives optimal trade and domestic taxes for a small open economy containing a monopolistically competitive (MC) sector in which firms may have Traditional theories of optimal trade and environmental policy are limited to stylized models that preclude quantitatively important con-siderations. The Quarterly Journal of Economics, 2015, vol. Trade Policy Literature A Brief Overview • qKey uestions: Why are countries protectionist? Can protectionism ever be “optimal”? Can we explain how trade policies vary across countries, industries, and time? How should trade agreements be designed? Can we explain the main institutional features of actual trade agreements (e. 1 Recent research in the international trade field has led to an explosion of new empirical methods that can be used to study the aggregate and distributional consequences of many types of changes to the economic environment (e. In quantitative finance area, optimal trade execution (OTE), also called optimal liquidation, is a critical issue in many investment activities [7, 16, 19, 24]. Economic Environment Consider a world economy with 2 countries, c = 1,2 There are two goods, i = 1,2, both produced under perfect competition good 2 is about trade policy. Under very general conditions, we show that from the point of view of a country that unilaterally imposes trade taxes to maximize domestic welfare, the self-selection of heterogeneous firms into exports calls for import subsidies on the least profitable Finally, we present recent theoretical insights on optimal unilateral trade policy with firm and product heterogeneity in the context of large and small open economies with perfectly and imperfectly competitive product markets. WTO, NAFTA, EU)? Under these conditions, optimal trade policy generally falls short of achieving a first-best outcome, except in cases with sectoral invariant scale elasticities. File name: nber. The social welfare of domestic 491 Yen-Ju Lin / Procedia ing optimal trade policy and show that our main insights are robust. GROSSMAN We analyze the welfare effects of trade and industrial policy under oligopoly, and characterize optimal intervention under a variety of assumptions about mar-ket structure and conduct. While Krishna (1988) considers only unilateral trade policy of a single country, Klimenko (2009) and Fujiwara (2011a,b) exclusively focus on price competition in an import-competing model and quantity competition in As a result, optimal trade policy leads to non-zero tariffs even when countries can coordinate their policies. AU - Haaland, Jan I. We use our framework characterizes the key determinants of optimal tariffs: comparative advantage, sectoral productivities, as well as the elasticity of sectoral choice in each country. Finally, in Section 6, we conclude by discussing some of the potential implications of our analysis as well as further questions for future research. We assume that labor is the only factor production, that all cost functions This paper generalizes to higher dimensions the two good result that the optimal trade policy for a large country is an import tariff. On the other hand, some studies focused on the influential factors of trade policies, such as income OPTIMAL TRADE AND INDUSTRIAL POLICY UNDER OLIGOPOLY* JONATHAN EATON AND GENE M. Working Paper 19689 DOI 10. We use a competitive trade model with input-output linkages where trade affects relative wages and the reallocation of workers across various sectors is frictional. Each firm produces a single product that may be a perfect or imperfect sub- Trade Policy in Developing Countries Trade Policy in Developing Countries is an analysis aimed at academics, graduate students,and professional,policy-oriented economists. Qiu, Optimal strategic trade policy 335 Cournot competition in order to reduce the foreign firm's production, or the low-cost firm signalling a high cost under Bertrand competition to raise the foreign firm's price. This paper derives optimal trade and domestic taxes for a small open economy containing a monopolistically competitive (MC) sector in which firms may have heterogeneous productivity levels. Inthefirstexercise,allgoodsareassumed to be agricultural goods, whereas in the second, all goods are as- the design of optimal trade policy when heterogeneous firms select into exporting. When all output is exported, optimal policy with a single home firm depends on the difference between foreign firms' actual responses to the home firm's actions Yet, it has had surprisingly little impact on how economists think about trade policy. tariffs and export taxes matter. Ziran Ding, 2022. pdf Size: 0K If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity. OPTIMAL TRADE POLICY AND THE ROLE OF CONJECTURAL VARIATIONS: THE CASE OF DUOPOLY In this and subsequent sections we characterize optimal gov-ernment policy in the presence of oligopolistic competition among domestic and foreign firms in international markets. 5 %âãÏÓ 4 0 obj /Filter /FlateDecode /Length 2419 >> stream xÚXY“Û6 ~Ÿ_Á—­p¶,. 8 This literature usually does not feature more than two In this paper we provide an integrative treatment of the welfare effects of trade and industrial policy under oligopoly, and characterize qualitatively the form that optimal intervention takes under a variety of assumptions about the number of firms, their conjectures about the response of their rivals to their actions, the substitutability of their productsand the markets in which they are sold. The results suggest that (a) a country that has an inefficient level of unemployment may experience welfare losses from free trade; (b) having search-generated unemployment is not sufficient to justify a use of trade policy, because free trade is still optimal when the labor market is constrained-efficient; and (c) a small country that has an about trade policy. At the micro-level, we find that optimal import taxes discriminate against the most profitable foreign exporters, while optimal export The results suggest that (a) a country that has an inefficient level of unemployment may experience welfare losses from free trade; (b) having search‐generated unemployment is not sufficient to justify a use of trade policy, because free trade is still optimal when the labor market is constrained‐efficient; and (c) a small country that has Optimal Multilateral Trade Policy Antonella Nocco, Università del Salento Gianmarco I. Under very general conditions, we show that from the point of view of a country that unilaterally imposes trade taxes to maximize domestic A First Look at Unilaterally Optimal Tari s 14. Ottaviano, LSE, Università Bocconi, CEP & CEPR Matteo Salto, European Commission PRELIMINARY DRAFT September 2017 Abstract How should multilateral trade policy be designed in a world in which countries di⁄er in terms of market access and technology, and Adopting optimal environmental regulation in an open economy characterized by market distortions, policy constraints and transboundary pollution, is challenging. (2010), Nordhaus(2015),Böhringer et al. (2021), and However, optimal trade policy and equilibrium trade imbalances move together when a country grows consistently faster or slower than the rest of the world. Yan Bai, Keyu Jin, Dan Lu and Hanxi Wang. The process of innovation and diffusion is one in which new ideas are Section 3 analyzes optimal trade policy in a network goods oligopoly with no managerial delegation, taking price and quantity competition into account separately. We close the chapter by discussing the scope of future research. "Geography, Competition, and Optimal Multilateral Trade Policy," Development Working Papers 446, Centro Studi Luca d'Agliano, University of Milano. under subsidy policy) when 1976, Journal of International Economics. We demonstrate that, in the absence of managerial delegation, the optimal trade policy entails an export tax (subsidy) if network externalities are weak (strong). Trade Policy Under Firm-Level Heterogeneity in a Small Economy. economy shows that welfare gains from optimal policy are largely due to static terms-of-trade effects, implying that gains from time-varying tariffs or Optimal Trade Policy with International Technology Diffusion. optimal trade policy and the equilibrium levels of deficit and surplus. A weak form of the optimal tariff, requiring that an import Expand. Solving the first micro problem as we did in our baseline analysis, one can check that conditional on Q HF, the optimal allocation coincides with the allocation in the decentralized equilibrium. We also discuss how optimal trade policy is shaped by the presence of multiple sectors, intermediate goods, and supply-chain linkages. 1 Recent research in the international trade eld has led to an explosion of new empirical methods that can be used to study the aggregate and distributional consequences of many types of changes to Trade policy analysis has been a central focus of research since at least the pioneering optimal tariff analysis in Bickerdike (1907). P. Each firm produces a single product that may be a perfect or imperfect sub- ing optimal trade policy and show that our main insights are robust. This paper differs from Dutt et al. D. Brander and Spencer (1984, 1985) are two seminal papers in this area, investigating the strategic use of import tariffs and export subsidies, respectively, to improve domestic welfare. 2 There is, however, scant evidence on how to design optimal trade policies in managerial exporting firms operating in a horizontally differentiated network goods oligopoly, which is a widespread phenomenon as documented below. First, it allows researchers to study the relationship between economic fluctuations and trade policy. 581(Week 12) Trade Policy Theory (I) Fall 20174 / 28. In Section 4, we examine the impact of relative-performance-based managerial delegation in firms and its interaction with the strength of network externalities on optimal trade policy ficacy of trade policy at tackling environmental emission (e. We use two methods to account for the time dependencies in the market data based on two different neural network architecture: 1) Long short-term memory (LSTM) networks, 2) Fully-connected networks (FCN) by stacking the most recent limit The possibility of time variation in trade policy is also important in understanding the potential relationship between the state of the economy and optimal trade policy. For example, optimal trade policies in recent general equilibrium trade models are theoretically The market supply and demand get adjusted over time until the post-policy equilibrium arrives. This reflects the fact that, conditional on the size of an Our paper is related to the literature on optimal trade policies. This paper, in contrast, computes the fully optimal policies. Haaland Anthony J. The Micro to Macro: Optimal Trade Policy with Firm Heterogeneity Arnaud Costinot MIT Andrés Rodríguez-Clare UC Berkeley Iván Werning MIT May 2016 Abstract The empirical observation Downloadable! Recent evidence, as illustrated by Autor et al. The production location potentially depends on a combination of trade costs, inclusive of trade Backed by our global quantitative trading fund, OTS Research and leading hedge fund, OTS Capital, trading with Optimal Traders means trading with unparalleled financial backing. This paper, in contrast, computes the fully optimal Can protectionism ever be “optimal”? Can we explain how trade policies vary across countries, industries, and time? How should trade agreements be designed? Can we explain the main We study optimal dynamic trade policies in an Eaton-Kortum model with technology dif- fusion through trade. 1 If domestic firm d do not have foreign local firm 1’s corporate control rights We now proceed to discuss the optimal trade policy of domestic country. First, trade policy could fluctuate over time, which creates the possibility for tariffs to affect saving and investment decisions in expectation of future changes in trade policy. Our baseline environment is a canonical model of intra-industry trade with monopo- listic competition and To answer these questions, we characterize optimal trade policy under a dynamic trade model in which trade imbalances are generated en-dogenously. We study dynamic optimal trade policies in a multi-country model with technology diffusion through trade. involves optimal trade policy in an international oligopoly market. II. %PDF-1. The process of innovation and diffusion is one in which new ideas are Comparative Advantage and Optimal Trade Policy. Quantity: Required A First Look at Unilaterally Optimal Tari s 14. Trade policy analysis has been a central focus of research since at least the pioneering optimal tariff analysis in Bickerdike (1907). I first solve for a competitive equilibrium and a social planner’s problem, and I identify the sufficient condition that is needed to achieve ship between comparative advantage and optimal trade policy. Motivated by the threat of job losses and welfare losses due to international trade, I. We propose a deep learning framework, DL-opt, designed to efficiently solve for optimal policies in quantifiable general equilibrium trade models. At the micro-level, we find that optimal import taxes discriminate against the most profitable foreign exporters, while optimal export the design of optimal trade policy when heterogeneous firms select into exporting. In this study we find that under Cournot competition it is optimal for the home government to offer a menu of policies which BS study the optimal trade policy in a dynamic Ricardian economy with two countries – Home and Foreign – where inelastically supplied labor is the only factor of production. We analyze the welfare effects of trade and industrial policy under oligopoly, and characterize optimal intervention under a variety of assumptions about market structure and conduct. It is defined as how to sell a certain number of shares of a given stock within a fixed time while maximizing the revenue, or how to buy a certain number of shares within a fixed time so that the trade cost is minimized. Perhaps surprisingly, 1 Introduction Trade policy analysis has been a central focus of research since at least the pioneering optimal tari analysis inBickerdike(1907). The model predictions are supported by patterns of tariffs in WTO member countries. 1 Examples of optimal trade taxes include (i) a zero import tar- Standard ToT considerations pin down the optimal level of trade policy. cmu. , Downloadable (with restrictions)! We study optimal dynamic trade policies in an Eaton-Kortum model with technology diffusion through trade. We assume that labor is the only factor production, that all cost functions In comparison to static trade policy analyses, the problem of optimal policy under a dynamic setting has at least two novel features. The Optimal Trade Policy and the Role of Conjectural Variations: The Case of Duopoly In this and subsequent sections we characterize optimal government policy in the presence of oligopolistic competition among domestic and foreign firms in international A growing body of research shows that democracies have more liberal trade policies than do autocracies. " Firm heterogeneity, variable markups, and multinational production: A review from trade policy perspective ," Journal of Economic Surveys , Wiley In this paper we provide an integrative treatment of the welfare effects of trade and industrial policy under oligopoly, and characterize qualitatively the form that optimal intervention takes under a variety of assumptions about the number of firms, their conjectures about the response of their rivals to their actions, the substitutability of their productsand the markets in which they are Wang, and Zhu (2024) characterize optimal trade and industrial policies, in the U. We consider twoseparateexercises. In the absence of capital controls, optimal trade protection is counter-cyclical. The –rst is the literature on optimal trade policy under imperfect competition (Grossman and Helpman, 1989; Grossman, 1992). At the micro-level, we find that optimal import taxes discriminate against the most profitable foreign exporters, while optimal export taxes are uniform across We compute the optimal trade policies for both the steady state and the transition to the steady state. In this study, we build stylized analytical models to explore the optimal choice of a trade-in-return policy. Under this stage, the domestic government maximizes its welfare to determine the optimal export subsidy. When all output is exported, optimal policy with a single home firm depends on the difference between foreign firms' actual responses to the home firm's actions and the responses that the home about trade policy. 2 The Basic Model and the Planner’s Problem We study optimal dynamic trade policies in an Eaton–Kortum model with technology diffusion through trade. In this paper, we explore the relationship between optimal trade and redistributive policies. Optimal trade taxes should be uniform across imported goods and weakly monotone with respect to comparative advantage across exported goods. Analysis encompasses cases in which the domestic MC sector is able to expand or contract flexibly, or is constrained to be of fixed size. Perhaps surprisingly, search of the optimal emission trading and technology investment decisions for a make-to-order company faced with a stochastic demand under emission trading policy. Existing quantitative studies examine simplified variants of these proposals that are not optimal, sidestepping the computational challenges associated with optimal policy analysis. The vast literature on trade policy—which has concerned itself mostly with static impacts of trade policy—cannot properly address this relationship. 130, issue 2, 659-702 . 2 (February We then apply our DL-opt framework to solve optimal trade and industrial policies in a multi-country-multi-sector general equilibrium trade model with input-output linkages and sectoral scale economies, `a la the models of Lashkaripour and Lugovskyy(2023),Bartelme et al. W e. We also discuss how optimal trade policy is shaped by the presence of multiple sectors, intermediate goods, and . The final part of the analysis then investigates optimal trade policy in the competitive equi-librium. Mizuno and Takauchi (2020) present a third-market model with a vertical trading structure and Table 3 gives first and second best optimal policies for the general case (i. ÁC$ó²±ÇvìÄŽ½ödS[N ±ÃCæ1ãù÷ù ݤ¤Y¥öA 4 } ½½ z?^ÿg|q{õ ×Yî©,ˆTšx·;OÅ*ˆ°´. 3 Consistent with the importance of terms-of-trade considerations, we also find that pure Pigouvian taxes may backfire, with Ireland, for instance, experiencing a welfare loss Micro to Macro: Optimal Trade Policy with Firm Heterogeneity Arnaud Costinot MIT Andrés Rodríguez-Clare UC Berkeley Iván Werning MIT May 2016 Abstract The empirical observation II. For example, our main prediction—that optimal trade taxes are uniform across imported goods and weakly monotone with respect to comparative advantage across goods—holds without further qualification in a Ricardian model with uniform iceberg trade costs. Using a dynamic—as opposed to static—framework has several advantages for policy analysis. Tan; Optimal Trade Policies and Non-Economic Objectives in Models Involving Imported Materials, Inter-Industry Flows and Non-Traded Goods12 with a large body of trade policy analyses that abstract from distributive issues (Bagwell and Staiger, 2016). To optimize policies, it alternates between sampling data Optimal trade policy: Two)-period model with zero adjustment costs To analyze the problem of optimal trade policy for the exporting country in the presence of a market-disruption-induced possibility of QR-intervention, we will deploy the usual trade-theoretic model of general equilibrium, but will extend it to a two-period framework in sections "Geography, Competition, and Optimal Multilateral Trade Policy," Development Working Papers 446, Centro Studi Luca d'Agliano, University of Milano. optimal trade policy upon non-cooperative scenario with consideration of supply elasticities. The computational study also reveals that the number of warehouses opened decreases with the increase of financing costs. Despite their rich structure, existing analyses have mostly quantified the efficacy of easy-to-implement but sub In this paper, we explore the relationship between optimal trade and redistributive policies when the gains from trade are unequally distributed. edu Ali Shourideh Carnegie Mellon University ashourid@andrew. Each firm produces a single product that may be a perfect or imperfect sub- II. Optimal trade policy: Two)-period model with zero adjustment costs To analyze the problem of optimal trade policy for the exporting country in the presence of a market-disruption-induced possibility of QR-intervention, we will deploy the usual trade-theoretic model of general equilibrium, but will extend it to a two-period framework in sections Optimal trade policy with monopolistic competition and heterogeneous firms Jan I. Our baseline environment is a canonical model of intra-industry trade with monopo-listic competition and firm-level heterogeneity. "Geography, competition and optimal multilateral trade policy," LSE Research Online Documents on Economics 102632, London School of Economics and Political Science, LSE Library. AU - Venables, Anthony J. 1 A second feature of trade policy in dynamic settings is the Optimal trade policy 4. E. and China, that are uniform across certain industries. (2009) in that I consider the efficiency of the labor search equilibrium and characterize the optimal trade policy. In comparison to static trade policy analyses, the problem of optimal We study optimal dynamic trade policies in an Eaton–Kortum model with technology diffusion through trade. We study how income taxes and trade policies should be Optimal Trade Policies and Labor Markets. In general, policies work through both a terms-of-trade and a variety effect, and the paper shows how the relative importance of each depends on the structure of the economy. H. Finally, if the number of di erentiated varieties is ine ciently low, the optimal non-cooperative trade policy is given by a positive import tari (export subsidy). Given ToT elasticities, level of protection not a ected by heterogeneity Though heterogeneity a ects optimal pattern of protection at the micro-level Optimal Policy in New Trade Models May 30th, 2017 4 / 51. 2 A PPO Formulation to Optimal Trade Execution The PPO algorithm is a policy gradient algorithm proposed by OpenAI [Schulman et al. Arnaud Costinot, Dave Donaldson, Jonathan Vogel and Iván Werning. This paper examines the political economy of U. gydk casymg jbqp pufsvfr oao gdfka aduerowwe wakj bgfofv faghosu