Typically the cost of a product has many components. Various components correspond to the production chain steps through which the product goes before meeting a customer. This also takes place in the price formation in wireless networks. For instance, before transmitting customer data, a network operator has to buy some frequency range and also establish contracts with electricity providers. In...

Public finance experts have long explored the issue of income taxes making the cost of market transactions higher than nonmarket ones. A 50 percent income tax, for example, requires $20,000 in income to purchase $10,000 of market goods. The tax can be avoided, however, if the same goods can be produced at home. The upshot is that income taxes encourage the home production of goods and services ...

This paper provides an analysis of non-cooperative tariff-setting in the presence on foreign direct investment. We set up a two-country general equilibrium model with co-existence of exporters and horizontal multinational firms. For symmetric countries, analytical results are derived. The theoretical analysis is enriched by numerical simulation exercises to provide a concise picture of how asym...

We model agents’ incentives to invest in production of export goods when governments are commitment constrained with respect to their trade obligations. Once irreversible investments have been undertaken, the governments have incentives to renegotiate the tariff rates to higher values. The renegotiations are costly; the greater the tariff rate adjustment, the greater the expenses. We find that ...

This paper presents new estimates of annual U.S. production of pig iron dating back to 1827. These estimates are used to assess the vulnerability of the antebellum iron industry to foreign competition and the role of the tariff in fostering the industry’s early development. Domestic pig iron production is found to be highly sensitive to changes in import prices. Although import price fluctuatio...