دانلود مقاله ISI انگلیسی شماره 19680
عنوان فارسی مقاله

ساختار بازار درون زا و اثرات رشد و رفاه یکپارچگی اقتصادی

کد مقاله سال انتشار مقاله انگلیسی ترجمه فارسی تعداد کلمات
19680 2003 25 صفحه PDF سفارش دهید محاسبه نشده
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عنوان انگلیسی
Endogenous market structure and the growth and welfare effects of economic integration
منبع

Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)

Journal : Journal of International Economics, Volume 60, Issue 1, May 2003, Pages 177–201

کلمات کلیدی
ساختار بازار - رشد - تحقیق و توسعه - ادغام - &
پیش نمایش مقاله
پیش نمایش مقاله ساختار بازار درون زا و اثرات رشد و رفاه یکپارچگی اقتصادی

چکیده انگلیسی

This paper studies the growth and welfare effects of integration in a world economy populated by global oligopolists. In economies that move from autarky to trade, growth and welfare rise because exit of domestic firms is more than compensated by entry of foreign firms so that integration generates a larger, more competitive market where firms have access to a larger body of technological spillovers that support faster growth. The effects of a gradual reduction of tariffs are different because economies start out from a situation where all firms already serve all markets. In this case, the global number of firms falls so that the variety of consumption goods and the diversity of innovation paths fall. The surviving firms, on the other hand, are larger and exploit static and dynamic economies of scale to a larger degree. These homogenization and rationalization effects work in opposite directions. Under plausible conditions, the rationalization effect dominates and growth and welfare rise.

مقدمه انگلیسی

In the last 50 years the world has become more integrated as institutional and technological changes have lowered barriers to the mobility of goods, capital and people. This process of globalization affects individual economies through several mechanisms. A very powerful one is industrial restructuring, that is, the change in market structure that occurs as a result of entry/exit of firms. This paper discusses a model where industrial restructuring entails exit of domestic firms and asks whether such a change in market structure is beneficial for growth and welfare.1 There are two ways to approach this question. One can compare autarky to free trade or one can look at the effects of an incremental liberalization of world trade. The first question is about gains from trade, the second is about how changes in global tariffs affect the exploitation of gains from trade at the margin. This paper undertakes both exercises and thus provides a comprehensive characterization of the role of trade in the determination of growth and welfare in the global economy. In economies that move from autarky to trade—free or restricted by tariffs—integration raises growth and welfare because exit of domestic firms is more than compensated by entry of foreign firms. In other words, the fact that domestic consumers and producers gain access to foreign goods and knowledge means that integration generates a larger, more competitive market where firms have access to a more diverse body of technological spillovers that supports faster growth. The growth effect is larger the less competitive the economy is before integration, while it is negligible for economies that are very competitive to begin with. The effects of a gradual reduction of barriers to trade—a global reduction in tariffs—are different because economies start out from a situation where all firms already serve all markets. Hence, the reduction of barriers to trade makes all markets more competitive, in the sense that in each country domestic producers are less protected, and thereby triggers a reduction in the global number of firms. In other words, in each country consumers see a reduction of the variety of available goods and producers see a reduction of the diversity of spillover sources. In this case, there is a tension between internal and external increasing returns. The reduction of the global number of firms means that the variety of consumption goods and the diversity of innovation paths fall. This is the homogenization effect. On the other hand, the surviving firms are larger and exploit static and dynamic economies of scale to a larger degree. This is the rationalization effect. A global reduction in tariffs raises growth and welfare if the rationalization effect dominates. Two aspects of the analysis are worth emphasizing. Firstly, the notion that openness to foreign competition drives domestic firms out of business is accepted by most people. What is not often accepted, however, is that the benefits dominate the costs. An exception is the rationalization argument due to Eastman and Stykolt (1960), and formalized by Dixit and Norman (1980) and Horstmann and Markusen (1986), that protection leads to excessive entry and thus prevents firms from achieving an efficient size. Horstman and Markusen wrote partially in response to Venables (1985), who argued that protection can raise national welfare in the context of a homogeneous good model where markets are segmented, and showed that his results depended crucially on the assumption of segmented markets. Venables (1987), in turn, pointed out that the difference between segmented and integrated markets is irrelevant in a differentiated products model and showed that the benefits from protection stem from the fact that it raises the share of the market for differentiated goods that domestic firms capture. This paper provides a generalization of these arguments to a framework where the number of firms and firm size—which are jointly determined and thus interdependent—affect economic growth. Moreover, it looks at the general equilibrium effects for the global economy of multilateral actions—like the global reduction in tariffs due to the GATT-WTO—as opposed to focusing on unilateral trade policy. The framework takes into account several features of real-world industry and does not produce counterfactual predictions, like a linear scale effect, that make previous analyses of the growth effects of integration not convincing.2 Moreover, it sheds light on the conditions under which protection is or is not beneficial and thus clarifies important issues in the debate on the ‘new protectionism’ that trade models based on increasing returns seem to underpin intellectually. The second aspect worth emphasizing is that the effects of a move from autarky to free trade are different from those of an incremental liberalization of world trade. According to Baldwin and Forslid, 1999 and Baldwin and Forslid, 2000, this property is shared by most trade models based on imperfect competition and stems from the fact that incremental trade liberalization has non-linear effects. This paper’s results point out that, in fact, this property is embedded in trade models of product variety because these models by construction let consumers have access to all goods. This means that a reduction of trade frictions affects the quantity of each foreign good that domestic consumers buy but does not affect the wedge between the number of goods produced domestically and the number of goods that are available to domestic consumers. A comparison of autarky to trade, in contrast, focuses by construction on the wedge between goods produced domestically and goods available to consumers. This paper studies issues that are notoriously complex. To keep the analysis tractable, it focuses on the effects of integration among identical countries. As a result, it works with a model of intra-industry trade in the tradition of Helpman and Krugman (1985) and ignores the effects that derive from comparative advantage when technologies, preferences, and endowments differ. Specifically, it models a world economy characterized by global oligopolists that produce differentiated goods, engage in worldwide Bertrand price competition and establish in-house R&D facilities to produce, over time, a constant flow of incremental, cost-reducing innovations.3 Welfare in the typical country depends on the level and growth of consumption and on the variety of consumption goods.4 The paper is organized as follows. Section 2 presents the basic closed-economy model that in Section 3 is generalized to the case of trade restricted by ad-valorem import tariffs. Section 4 shows how a move from autarky to free trade improves growth and welfare. Section 5 studies the effects of a global reduction in tariffs. Section 6 compares the two exercises and discusses the differences in the results that they yield.

نتیجه گیری انگلیسی

This paper has discussed the role of economic integration in a model of endogenous growth where the size of the firm and the interactions between growth and the endogenous structure of the market play a crucial role. In contrast to previous work based on first-generation models of endogenous innovation (e.g. Grossman and Helpman, 1991, Rivera-Batiz and Romer, 1991a, Rivera-Batiz and Romer, 1991b, Baldwin and Forslid, 1999 and Baldwin and Forslid, 2000), the paper focused on a model of Schumpeterian innovation undertaken in-house and characterized by partial knowledge spillovers. This allowed analysis of the effects of integration on competition, R&D activity, and ultimately on growth and welfare, in a world economy populated by global oligopolists. The paper has provided a characterization of the conditions under which integration improves growth and welfare. The results differ quite drastically according to whether one compares autarky to free trade or looks at the effects of an incremental trade liberalization. Consider first a move from autarky to trade. Each firm faces a market where the number of customers and the number of competing firms have increased in the same proportion, so that sales per firm do not change, but where tougher competition reduces firms’ market power and yields lower mark-ups and profit margins. As a result, in each country the domestic number of firms falls. From the viewpoint of the consumer, however, exit of domestic producers is more then compensated by entry of foreign firms that are now free to export to the consumer’s country. More generally, integration produces a major change in industrial market structure: the integrated market is larger and concentration is lower. Firms in a larger, more competitive market spend more on R&D—which is also more productive because spillovers are stronger—so that growth is faster. Welfare increases because the global number of firms in the integrated market is larger than the number of domestic firms in autarky, while tougher competition forces firms to charge lower mark-ups and prices. This mechanism is at work also in the case of a move from autarky to trade restricted by tariffs. Hence, one can conclude: Summary 7 Gains from trade. A move from autarky to trade—free or restricted by ad-valorem tariffs—raises growth and welfare because it generates a larger, more competitive market where producers have access to a larger number of customers and a larger body of knowledge spillovers, while consumers have access to a larger variety of cheaper goods. Hence, the quantity, variety and growth of consumption rise. The effects of an incremental reduction in tariffs are drastically different. The competitive effect of lower tariffs reduces firms’ market power and yields lower mark-ups and profit margins. The crucial result is that the global number of firms falls. The consumer now sees exit of domestic and foreign firms. Integration, therefore, leads to a market that is of the same size—because the number of customers has not changed—while concentration is higher. There is thus a tension between the effect of the lost protection in the domestic market and the effect of the larger share of the global market that each firm now commands. On the other hand, spillovers are now weaker because some sources of knowledge are lost due to exit. In principle, the growth effect is ambiguous. Similarly, the welfare effect is ambiguous because the variety of consumption goods is smaller while, partially compensating this, firms have less market power and charge lower mark-ups. One can thus conclude: Summary 8 Incremental trade liberalization. A global reduction in tariffs triggers a trade-off between internal and external economies of scale. The variety of sources of knowledge spillovers and of consumption goods falls. This homogenization effect tends to reduce growth and welfare. On the other hand, firms become larger while tougher competition induces them to reduce mark-ups, which allows consumers to buy larger quantities of the available goods, and raise R&D spending. This rationalization effect tends to raise growth and welfare. The balance of these forces is such that growth and welfare generally increase with the reduction in tariffs except at sufficiently low values of the tariff where it is possible that they decrease. These exercises suggest that to determine the benefits of integration one needs to be very clear about the question that one is asking. Where does the difference between them come from? In the case of a global reduction in tariffs, there cannot be entry of foreign firms in the domestic market because all firms operate in all markets to begin with. Hence, the only effect that the model can capture is the loss of market power of domestic firms due to lower tariffs with the consequent fall in net profits that squeezes out some firms. As a consequence, looking at an incremental trade liberalization gives a different answer from comparing autarky to trade. The first exercise produces results that match conventional intuition on the benefits of international trade: larger markets, more competition, more choice. This is because one is looking at a shock that entails an increase in the number of firms that serve domestic consumers. The second exercise shuts down this channel. In so doing, it focuses attention on the opposite case where the shock entails a reduction of the number of firms that serve domestic consumers. In other words, the results for the case of incremental liberalization depend crucially on the property that the wedge between the number of domestic producers and the number of goods available to consumers does not depend on the tariff. This means that the number of goods produced and the number of goods consumed are constrained to move in the same direction and thus from the viewpoint of the domestic consumer exit of domestic firms is bound to yield exit of domestic and foreign firms. As a result, the growth and welfare effects of integration depend on the relative importance of increasing returns internal to the firm and increasing returns external to the firm. A global reduction in tariffs is beneficial when the love of variety effect is weak and technological spillovers do not change much with the number of firms. To some extent, these results also match conventional intuition expressed in complaints like ‘globalization is making the world more homogeneous’ that it is common to hear today. An interesting direction for future research is to develop a model that reconciles these different perspectives. Such a model should have the property that the wedge between the number of goods produced domestically and the number of goods consumed be a function of trade policy. To my knowledge there is no model with this property in the literature.

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