The brander-krugman model

The brander-krugman model Extended Essay 1 The Brander-Krugman model, also known as the reciprocal dumping model, explains the possibility of international trade in a homogenous good. In doing so, it raises an interesting issue: is this apparently pointless trade socially beneficial? Meanwhile, Corden developed a more realistic customs union (CU) theory compared to orthodox theory by relaxing the assumption of constant marginal costs (MC). While the framework of these two models are similar, their conclusions are very different, the reasons for which are discussed further below. a) Both models are set in a partial equilibrium framework; the prices of all substitutes and complements of the good in question are assumed to be constant, as are the income levels of consumers, allowing for an easier analysis of welfare gains from the formation of the customs union (CU). Within this framework, there is a single producer in each of the CU countries that produces a homogenous good. The other similarity between the two models is that the tariffs set and faced by both countries (Home (H) and Partner (P)) before CU formation are equal .Thus, when the union is created a Common External Tariff (CET) already exists. Corden develops his model in further stages to include made-to-measure tariffs so that the CET has to be set upon CU formation. It is assumed that this will be set lower than the original tariffs that were imposed. The countries forming a CU in Cordens model are small relative to the rest of the world (R), implying that its formation will have no effect on world prices. In the Brander-Krugman model, all three countries (R is represented as one country) are identical in size. Symmetry is assumed between the firms in the Brander-Krugman model therefore the firms in each of the countries face the same constant marginal cost and domestic demand functions, contrary to Corden. Corden relaxes the assumption of constant marginal costs (MC) that is held in orthodox customs union theory, and assumes instead that the firms benefit from internal economies of scale and thus face declining marginal and average cost (AC) curves. Figure 1 shows that the minimum point of the firms AC curves is above the price paid for imports (pm). Hence a tariff is necessary to protect domestic production, which is set at T- pm and prevents R from importing to H and P. The domestic price being equal to the firms AC, they operate at a normal profit. The price received for exports (px) is assumed to be lower than pm as H and P also face tariffs. Therefore, their AC is greater than px and so they cannot export their goods either. Thus, unlike in the Brander-Krugman model, there is no international trade prior to CU formation. The main characteristic of the Brander-Krugman model is that the firms display Cournot behaviour the firms make decisions about their own output levels to maximise their profits assuming that the output levels of the other producers will not change[1]. This is not necessarily the case in Cordens model. b) The existence of internal economies of scale in Corden means that efficiency and welfare gains could be increased if a single firm increases its output and captures both markets following CU formation. This, along with the assumption that the firms face different cost functions, leads to the conclusion that the firm with the higher AC will exit the market and import the good from the firm that can produce it at a lower cost (this essay will assume that the partner firm exits the market). The assumption that the partner firm operated at a normal profit pre-CU indicates that there will be no loss of producer surplus and no welfare loss in P as it exits the market. Conversely, the symmetry between the firms in Cournot means that neither firm in the CU has a cost advantage over the other. Thus, both the home and partner countries benefit from CU formation by increasing trade with each other, resulting in an increase in output for both firms (Appendix, equation (1)). Although H and P have increased their overall output, the quantity they supply in each of their domestic markets decreases (equation 2). Although there is an overall gain in welfare in both models as a result of CU formation, the source of these gains differ. Both the home and partner countries experience a welfare gain from CU formation in Cournot given the symmetry, whereas only the home country benefits in Corden as the partner firm exits the market. In Cournot, the price falls in the markets (equation 3) and thus the welfare gain is largely reflected by an increase in consumer surplus (equation 4) in both the home and partner markets. The countries also lose welfare through a fall in tariff revenue (equation 5) and the firms profits may rise or fall depending on the elasticity of the aggregate demand in the CU (equation 6). However, Hs overall welfare gain is shown to be always positive (equation 7). In Corden, the assumption that the home and partner countries are small compared to the rest of the world implies that the CU firms are not large enough to compete with the outside firm and therefore the CU formation will not affect world prices. This, along with the assumption that the remaining firm within the CU maximises his profit by charging right up to the import-preventing price, which is the world price plus the CET, means that the price will remain unchanged. Thus, the increased welfare is due to an increase in the remaining firms producer surplus (figure 1, a+ß) as the fall in average cost (to J, figure 1) is not passed onto consumers. However, if made-to-measure tariffs are assumed and the CET is lower than both the initial tariffs, a price reduction will be induced in both countries and some of the welfare gain will be passed onto consumers. The symmetry in Cournot and differentiation in Corden also lead to different conclusions with respect to the impact on the rest of the world. In Corden, the CU formation does not affect Rs welfare under the assumption that there was no international trade pre-CU and there is still none post-CU. In Cournot, the fall in Rs output (equation 8) and the price drop in H and P impact negatively on the R firms profits (equation 9). As consumption and imports in R remain unchanged, Rs welfare is reduced. The main assumptions that lead to the different conclusions are those of symmetrical costs in Cournot and differentiation in Corden. This affects how the welfare gains are divided amongst the countries as well as how they are split between the producers and consumers. c) In discussing the appropriateness of the models to the EU situation, the relevance of the assumptions and the predicted results, and how the causes of these results compare with reality need to be considered. There are many studies that analyse how EU integration has affected trade flows in terms of trade creation and trade diversion. Trade creation is defined as intra-EU imports replacing domestic production; trade diversion as EU imports replacing imports from the rest of the world. By 1992, bilateral trade between any two EC countries was 65% higher than if the EC had not existed, supporting both models predictions that trade between the home and partner countries increases.[2] Over the period from 1959/60 to 1977, which includes both stages of integration for the EC and EFTA countries, annual trade creation was estimated at $20-31 billion and trade diversion at $5-8 billion.[3] This affirms the Cournot prediction that the partner firm would increase its imports to the home country at the expense of both domestic production and imports from the rest of the world. A study by the Single Market Review on the impact of the Single Market Programme (SMP) on trade creation and trade diversion gives a detailed insight into the relevance of the Corden and Cournot models to the EU situation.[4] Its data and analysis focuses on industries within the manufacturing sector, particularly the 15 industries that were likely to be particularly sensitive to the SMP.[5] Although there are some industries close to perfect competition with a concentration ratio of 0.00 or 0.01 such as clothing and boiler making most industries within the EU are relatively oligopolistic according to their average concentration ratios. The assumption of perfect information is unlikely to hold true. In many economic theories where this is assumed, it is highly unrealistic, especially with regards to the reactions of a firms competitors to the union formation. While Cournot assumes that firms face a constant MC, a 50% reduction in output from the minimum efficient scale of output led to an increase in AC, and therefore MC, in all the industries analysed, thus indicating the presence of economies of scale. The assumption that all firms display Cournot behaviour does not always hold in the context of the EU. Through a comparison of the changes in the price-cost margins and in the home firms market share in the domestic industry, it is evident that industries reacted in two very different ways. One group, including office machines and pharmaceutical products, experienced large cuts in their price-cost margins and a relatively small change in their market share, while the opposite is the case for the other group. It appears that the first group decided to reduce its prices instead of losing market share, implying that some firms do not compete on output but on price. However, the effect of changes in competitive behaviour by firms on market shares was extremely small for most industries and countries, though it was usually more important in the smaller EU countries.[6] Thus, changes in firms behaviour are relatively insignificant in affecting market shares, compared to other factors. The assumption of symmetrical firms is, again, an unrealistic one. Given that the country sizes within the EU are very different, it is highly likely that firms across the EU faced different market sizes and domestic demand functions before integration, and as a result, they are unlikely to be the same size or have the same cost functions. In terms of the impact of the CU formation on the industries, most of the results predicted in Cournot hold true from 1900-94, the period examined in this SMR report. The price-cost margins in the 15 sensitive industries fell by an average of 3.9%, while they fell by 3.6% in the manufacturing sector as a whole. The extent of this drop in each industry depends on the behaviour of the firms. The impact of the SMP on the respective market shares in the manufacturing sector as a whole is negative for the home industries, and positive for both the EU and the rest of the worlds market shares in the home country. Cournots model correctly predicted that the home firm would sell more while the partner firm would sell less in the home market. However, it predicts that the rest of the worlds share of the home market would fall. The SMR carried out two ex-post simulations; one with no direct external trade effects and one with. All of Cournots predictions regarding changes in the market shares hold true for the former simulation. However, the latter simulation is more accurate in reflecting the actual changes in market shares that were experienced over this integration period. This implies that the Cournot model does not take into account the increasing liberalisation of external trade over this period that also led to a reduction in extra-EU trade costs, either as a result of the CU formation or due to increasing globalisation. In terms of welfare, the changes support Cournots prediction that welfare increased in both H and P. The change in welfare measured as a percentage of GDP was greater than the percentage change in GDP in each of the EU countries analysed. The main goal of creating the single market in the EU was to increase its competitiveness with respect to large economies such as the USA through economies of scale. This implies that Cordens model should offer a more accurate picture of the EU. However, certain assumptions do not reflect the EUs characteristics. The assumption that the CU-forming countries are small may hold true for some of the EU countries; however, the implication of this that the customs union will be unable to affect world prices may not hold. Given the size of the EU, it is large enough to compete with the large economies such as the USA and Japan. Cordens predictions regarding changes in price and market shares are not appropriate to the EU situation, due to the strong assumptions that there was no international trade prior to the formation and thus no trade with the rest of the world after. Also, with the partner firm exiting the market, it is assumed that there is no increase in competition following CU formation, thus no change in the prices. However, there is evidence supporting the main conclusion of this model that the welfare gain is a result of restructuring, which leads to increasingly concentrated industries as firms can benefit from economies of scale as the size of the market that they have access to increases. Between 1987 and 1993, the four-firm concentration ratio increased by 2.3% across 71 industries in the EU.[7] This was partly due to increased restructuring; between 1987 and 1990, the percentage of MAs involving countries from two different member states jumped from 9.6% to 21.5% in anticipation of the Single Market. This replaced MAs within country borders which fell from 71.6% to 60.7% over the same period.[8] While it is true that EU industry concentration has increased, this is cannot be attributed solely to an expansion in the market size. Many industries already operated internationally in the 1980s and hence, a market size expansion would not have had as big an impact on the concentration level. The single market also led to a reduction in non-tariff barriers (especially barriers to entry) between EU member states, through public procurement liberalisation, increased ease of cross-border knowledge transfer and the free movement of capital. Cordens comparative static model fails to take into account the dynamic effects of EU integration. The aim of the SMP was much more ambitious than a mere elimination of the tariff barriers and thus both theories, which focus on the effects of a CU, are too simplistic to be wholly appropriate. Certain aspects of both models are comparable to the EU situation. However, Cordens model seems to be more suitable; while Cournots results regarding changes in the prices and respective market share were more accurate, Cordens underlying characteristics are much more appropriate to the current EU situation. 1 Friedman, James (1983), Oligopoly Theory, Cambridge University Press Frankel (1997) (Ali El-Agraa P175) Kreinin (1979b) (Ali El-Agraa P175 European Commission/CEPR (1997) Trade Creation and Trade Diversion, Subseries IV/ volume 3 of The Single Market Review Buigues, Ilzkovitz and Lebrun (1990) EC/CEPR, 1997, Trade creation and trade diversion Subseries V, Volume 4, Economies of Scale AMDATA in European Economy (1999)

C20th Century Drama English Coursework Essay

This particular play is ‘A view from a Bridge’ written by Arthur Miller. Arthur Miller was born on October 17th, 1915, in New York City. His parents were both Illegal Immigrants in the United States, which links to the background of the play. A view from the Bridge was first produced as a one-act play in verse 1955; Arthur divorces his wife to marry his co-star actress Marilyn Monroe Miller has now become America’s world’s popular playwrights. Most of his plays are about the society and the responsibilities of its relation. But also in all the plays they hide a deep considerate of how people act and behave with the situation of life around them. These obstacles they face which they have to successfully defeat over. ‘A view from a Bridge’ has its roots in the late 1940’s when Miller was interested in the work and lives of New York. Miller purposely wanted the play to be a modern version of a Greek Tragedy, which a main character is faced with trying, daring situations, which cannot be escaped from. In this play a tragic hero commits an offence unexpectedly. He then learns from his misdeed and therefore must die for his actions. Then as it is a Greek Mythology the God’s restores the Universe. In this play the â€Å"Hero† is inked onto a man named Eddie Carbone. He is uniquely and ordinary everyday man. Courteous, hard working and a man that people liked. This play is themed on the background of Italian origins, which relates to the dispute of Italians and Americans. This is introduced with Alifieri’s Speech; â€Å"This is Red Hook not Sicily†¦ now we are civilised, quite American. Now we settle for half†¦. In no longer keep a pistol in my filling cabinet† This reflects with the context of the play and links with the storyline. It also reflects on the reason of the main cause concluding to the violence. The story is also based on the ‘American Dream’ that any person can accomplish what and no matter what upbringing culture or race. He has added this, as in that period of time the American Dream was quite popular which was appropriate for it to relate the aspects of their life. Arthur Miller has produced the main character being the lead role of the play. Eddie Carbone is an Italian Longshoreman working on the New York docks. Eddie is a simple hard workingman who worked on the piers. When his wife’s cousins were sent, Marco and Rodolfo, he agrees to refuge them as illegal immigrants from Sicily. First signs of disturbance are when Catherine starts to show attraction to Rodolfo, at this Eddie disapproves. This is because of Eddies over protectiveness towards Catherine. His possessive behaviour towards Catherine brings him to envy towards Rodolfo. Out of anger and rage at the end Eddie reported them to the Immigration Beaureu. In response of ferocity Marco decides to kill Eddie, but Eddie kills himself with the knife. In one section of evidence, which relates to his own downfall is the possessiveness of Catherine. Catherine is Eddie’s orphaned Niece. In the first scene the audience is immediately given the information that Eddie has a peculiar concern towards his niece. He mentions and details out of her dress sense and suggest it is too short. The evidence showing that he is overprotective is when he indicates that she is walking â€Å"wavy†. â€Å"I don’t like the looks they’re givin’ you in the candy store†¦ the heads are turnin’ like windmills. † In this it is brought immediately to the audience attention of the over protectiveness for his own nice. His concern and obssesiveness of his actions may have a hidden feelings that Eddie has for Catherine. An uncertainty of more than relative love is present with the way he feels for Catherine. Toe Eddie Catherine represents to him as â€Å"just a baby† and therefore she â€Å"does not understand these things† but this is a cover up for his possessive behaviour. In Act 1 page6-10 I suggest his behaviour is both possessive and protective but more possessive. As the conversation of Beatrice, Eddie and Catherine it shows that Eddie treats Catherine like a child, and not the rightful age that she should be treated. The relationship between Eddie and Catherine changes with the arrival of Marco and Rodolfo. As they talk and get to known each other Catherine shows an interest to Rodolfo as she keeps gesturing to Beatrice â€Å"He’s a real blond† He then sings to her â€Å"Paper Doll†, but in a kindest way Eddie tells him to stop. Also that is when the changes of Eddie’s behaviour begin. He embarrasses Catherine by telling her to ‘go ahead’ meaning get out. Eddie again tries to humiliate Catherine so that Rodolfo will lose interest by telling him that â€Å"she wants to be an actress† meaning she’s a drama queen. But Rodolfo flirts back by saying

Find Out Whos Concerned About Argumentative Essay Topics on Technology and Why You Should Be Paying Attention

Find Out Who's Concerned About Argumentative Essay Topics on Technology and Why You Should Be Paying Attention Explain whether Google has an effect on society. Getting literate in technology or the net is so popular that many believe it will no longer be essential to read conventional books as the principal source of material for education. Actually it is just one aspect of technology. Using technologies like the Internet for a teaching tool in schools really isn't the matter now because it is pervasively utilized. The government should work in collaboration with several stakeholders and the regional communities to conserve wildlife. Irrespective of this, a current survey proves that technology is initiating numerous difficulties. The fact remains the modern family is technology and societal media. To conclude, it is dependent on how you use technology. New Step by Step Roadmap for Argumentative Essay Topics on Technology Technology affects people throughout the Earth, both positively and negatively. It has become a part of our lives. You should clarify how some specific technology affects people. Today technology is quite significant in society for the reason that it makes life simpler to live on and less time consuming. Some topics which you might opt to utilize for your paper helping listed below. You are able to then practice replicating successful connections between ideas in your practice essays. Figure out which of the topics, you currently have a fairly good background on whic h will make it possible for you to have a relative edge. If you're looking for assistance with your essay then we provide a comprehensive writing service offered by fully qualified academics in your area of study. For instance, there are now thousands of absolutely free on-line courses readily available on YouTube that everyone can watch and learn from any place in the world. You've got Internet websites and library resources available. You may use several examples which can be found on the world wide web at no cost. Students use computers to produce presentations and also take advantage of the net to perform research on an assortment of topics for their essays and papers. The End of Argumentative Essay Topics on Technology Since you can see, several of the topics listed are new and tackle the recent issues happening in the World today. Therefore, the topic needs to be debatable! Also, selecting the most suitable topic is crucial. Selecting an emotional topic is also a super b idea. 1 aspect where the capacity of humans may initially be regarded as a case of deteriorating minds is the usage of net and mobile phones. The exact same issue is all about work. It's also required to mention lots of IT factors that have negative influence on the physiological condition and wellness of the student. One of the greatest approaches to change anybody's mind is with an emotional investment. Argumentative Essay Topics on Technology - What Is It? When it has to do with writing an argumentative essay, the most significant issue to do is to select a topic and an argument that you may really get behind. Some individuals say it does not have the sincerity of handwritten letters. They might think that the good content may be written on any topic and the paper success depends only on the mastery of the writer. Argumentative writings is a particular kind of a paper. An argumentative essay requires you to choose a topic and have a position on it. It will require you to take a particular stance about the topic you are writing about. Locating good essay topics you could discuss effectively and create powerful argumentative essays is a tough work. The Argumentative Essay Topics on Technology Trap There are invariably a wide selection of opinions on the topic of technology, and here are our favourite things to consider on this issue. Such usage is the sole clear evidence of understanding. Needless to say, you can observe the phenomena of human laziness alongside developed technology in some place. The reliance on technology ends in isolation. Prior exposure or knowledge about a specific subject provides better hindsight which may bring superior arguments on the issue. You're probably conscious of the basic arguments. Even if you think in a specific argument very strongly, if you lack the evidence to demonstrate your point, then your argument might just be as great as lost. Finding the most suitable arguments will allow you to prove your point and win. Many big businesses in the world are undergoing processes of modernization. Using alternative energy sources have for a lengthy time been discussed in various worldwide forums. There have been lots of studies done recently regarding how the modern family is being affected by technology and societal media. The most recent technologies additionally help to increase the creation of products and distinct crops. Some individuals even use computers to do each of the things they would like to do. A number of the TV's benefits that it might help the learners in various wa ys. Some people would rather find the most recent news through the net or TV. A good deal of people consider technology as the net.

Rugby Should be a School Sport Essay - 2091 Words

Rugby Should be a School Sport Imagine it is a Friday night underneath the lights, in October, and you are walking into a stadium packed with fans cheering. But the only noise you can hear is the sound of your cleats hitting the pavement as you are marching up to the field, and the only thing you see is the other team and the end zone. It is such a stimulating feeling, it is unforgettable. Now, you may think I am talking about an American football game, but I am not. I am talking about a rugby match. Believe it or not, football derived from rugby. Differences are in rugby, there are no pads, the ball does not have laces, fifteen men to a side, and above all else, it is an international sport and it is safe compared to football. How come†¦show more content†¦President Barack Obama is worried about the future of the sport, he told interviewer Homa Khaleeli with The Guardian. â€Å"He said if hed had sons he would have thought long and hard before allowing them to take up the national sport, insisting the game should become less violent, and adding that he was particularly anxious about college players.† (Khaleeli). One study that The Guardian used to expose the trauma that football players receive is that out of 35 football players that was examined, 34 showed signs of brain trauma. â€Å"In rugby, players are taught to use their arms to wrap a players legs and let the momentum of that player cause him to go to ground. Furthermore, in rugby there is no blocking, and so players who dont have the ball dont get hit when theyre not expecting it.† (Micheli). Lyle Micheli is a doctor of fifty years and played rugby himself, he stated the tackling technique that is used in rugby because he wanted to expose that the technique is very different and much safer than how football players tackle. â€Å"To be sure, rugby players get lots of bloody noses, chipped teeth, broken fingers but they like to show off these injuries, so one might come under the impression that rugby is a very rough sport.† (Mckenna). Jim Mckenna is a doctor and rugby coach. He brought up a valid point, sure rugbyShow MoreRelatedA Letter To Associated Students Of Western Oregon University1216 Words   |  5 PagesI was going to a small school, and I wanted that. I know only 5,382 students go to Western and that is not much bigger than my high school.The reason I came was for the Western for the WOU womens rugby team. When I came to WOU, I expected more support from the school and am very disappointed. 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