In this paper we investigate the effect of labor supply on various distributions of income in a North-South trade model with skilled and unskilled labor. Modifying Lai (1995) 's model by allowing external effects of imitation activity, we have shown there exists the critical value of parameter a below which all the results Lai has shown, especially, an increase in skilled labor supply raises its steadystate relative wage if the elasticity of substitution between goods is sufficiently large hold. And above the critical value, one of the results is reversed, that is, an increase in skilled labor supply reduces its steady-state relative wage. In both cases, nevertheless, North's effort to increase in skilled labor supply can increase the steady-state rate of innovation.
In this paper we analyze the effects of tariffs on R & D expenditure of foreign firms which perform quality-improving R & D activities. It is shown that the ‘Most Favored Nations’ (MFN) clause is superior to the discriminatory tariff regime as the importing country's trade policy. Furthermore, government R & D policies depend on the levels of spillover and product differentiation, so that government must coordinate the tariff policy according to these levels. We conclude that the levels of the cooperative equilibrium are higher than those of the non-cooperative one when the spillover effect is larger in the MFN clause case than in the case of discriminatory tariff regimes. The possibility that R & D cooperation, therefore, hurts the importing country's welfare becomes high, and then this tendency becomes strong as goods approach to perfect substitution goods. When the government takes the MFN clause, it is desirable to take positively the policy which leads to restriction of R & D cooperation, compared with the case of discriminatory tariff regimes.
This article examines the effects of trade liberalization on the environmental policies set by the government of an exporting country, the amount of investment in pollution abatement technology, the amount of pollution emission, and the welfare of an importing country. We begin with the case of foreign monopoly and demonstrate that, in the presence of technology change, trade liberalization may both improve the welfare of the importing country and reduce transboundary pollution. We derive the conditions under which such an outcome occurs. Moreover, we extend the model to the case of foreign oligopoly.
Ethier (1982) showed that in the presence of increasing returns to scale due to Marshallian externality a large country always gains from trade while under a certain condition a small country loses from trade at the trading equilibrium. In this paper we show that, even if Ethier's assumptions are relaxed, his main results still hold, and we further derive a necessary and sufficient condition for a small country to lose from trade. Moreover it is shown that the total world endowment of productive factor as well as the relative size of each country's factor endowment is important for the above necessary and sufficient condition in other cases than those which Ethier considered.