Using the footloose capital model with two countries, this paper studies different impacts of emission taxes and quotas on firm location and global emissions under trade liberalization. If only one country (North) sets a target of emissions, firms may have incentive to relocate to the other country (South). That is, the pollution haven effect could arise. We show that a further decrease in trade costs, given an emission regulation in North, increases firm relocation and global emissions only if trade costs are relatively low. Moreover, compared with emission taxes, emission quotas moderate firm relocation, which results in less pollution haven and hence less global emissions. JEL:F18, Q54
I argue that if the notion of the “status quo” is not incorporated appropriately in the models of trade policy issues, there may arise some theoretical/conceptual problems in interpreting the results derived from the models as the guidance for the implementation of trade policies. To clarify the point, I use concrete examples of theoretical analyses of trade policies both in the general equilibrium framework (the piecemeal tariff reforms and the optimal tariffs) and in the game-theoretic framework (the tariff negotiations). JEL Classification:F13, C71, C72.
ASEAN and developing East Asia have applied development strategies that have effectively utilized global value chains and have achieved both sustained economic growth and rapid poverty alleviation. This paper claims that the international trade theory or economics in general has greatly contributed to the formulation of such development strategies. Economists should also work for new issues and challenges that these countries start facing in a new step of economic development.
This paper aims to investigate the structure and the determinants of the trade of products manufactured by small- and medium-sized enterprises. For this purpose, a trade database for selected SME-based industries is prepared. Analyzing this database, the following three findings are obtained. First, firms in SME-based industries are facing a large inflow of imported goods, while the volume of their exports is relatively small.Secondly, the share of Asian countries is larger in the trade of SME products than overall trade. Thirdly, the gravity model can be applied for the trade of SME products. In some cases, distance and difference of income level tend to be more sensitive for SME products than overall trade. These results are consistent with the labor-intensive characteristics of SME products.