Trade in services has become an active area in the international scene of the modern economy. In addition, recent advancement of the information-communication technology (ICT) such as the Internet has brought about revolutionary changes in the ways through which international services transactions are made. In relation to this global trend, the notion of “time zone difference” has come into play as a new driver of international transactions. In this article we give an overview of the studies concerning the time zone difference and international trade. Theoretical literature emphasizes a positive, trade-facilitating effect (i.e., “continuity effect”) of the time zone difference. In addition to the continuity effect, empirical literature finds some pieces of evidence of an opposite effect (i.e., “synchronization effect”) that suppresses trade between countries. Empirical literature also finds that the continuity effect is more important in services sector (than in goods sector) and for those countries that enjoy higher levels of ICT infrastructure.
This paper proposes two models of trade and growth with heterogeneous firms and asymmetric countries based on the author’s recent research. After introducing the Melitz model with two symmetric countries and the Baldwin-Robert-Nicoud and related endogenous growth models, we allow for asymmetric countries by giving up either firms’ infinite horizon or transitional dynamics. We focus on the effects of policy shocks on countries’ productivity cutoffs, which provide much information about countries’ welfare and growth. We first see how the cutoffs are determined under symmetric countries, and then how they are additionally affected by endogenous factor prices under asymmetric countries.
In this paper, we assume two countries with trade of environmental goods (EGs), and then investigate the impacts of the emission tax, the tariff on imported EGs, and the subsidy for purchasing EGs. In our model, EGs are produced only in the exporting country, and the firms in the eco-industry which produces EGs engage in Cournot competition with free entry, while a polluting final goods sector in EGs’ importing country is perfectly competitive. Then, assuming the end of pipe pollution abatement in the polluting sector, we can obtain the following results: (I) Trade liberalization of EGs, that is, a decrease in the tariff on EGs and the subsidy for purchasing EGs increase the total output of EGs, and thus decrease the amount of emissions. (II) The impact of the subsidy on the price of EGs depends on the shape of the demand curve for EGs, while trade liberalization decreases the price. (III) The optimal emission tax level will be lower than the Pigouvian one if the level of the subsidy is higher than that of the tariff. (IV) The optimal tariff evaluating at the optimal emission tax level is negative, that is, the import subsidy can be optimal when the demand curve for EGs is linear or weak convex. (V) Under the same demand condition, the optimal purchasing subsidy is positive even when EGs’ importing country implements the optimal emission tax.
We present an evolutionary model of cultural change to investigate how international trade promotes a “cosmopolitan culture,” which is a mixture of local cultures. We find there is a stable stationary state in which both a cosmopolitan culture and a local culture coexist within a trading country. We interpret this as a theoretical reproduction of what is often observed:cultural diversity within a country and cultural similarity between countries. However, this result is dependent on the way in which parents transmit their cultural type to their children. When parents have perfect empathy with their children, local culture may go extinct due to international trade.