Questions and Answers of Intellectual Property

More on the Melitz effect. Using the calculations in the previous problem, you can do an exercise similar in spirit to Trefler (2004). Calculate labor productivity for each firm (once again, output
Identify one industry that is best thought of as perfectly competitive, one that is best thought of as monopolistic competition, and one that is best thought of as an oligopoly (staying away from
Think of what we know about trade and imperfect competition in the variants we have seen monopolistic competition versus oligopoly, symmetric versus asymmetric oligopoly, and homogeneous versus
Consider a model with two countries called France and Germany. France has one automaker, called Citroen. Germany has a competitor company, called Volkswagen. Citroen can produce cars at a constant
In the main Kodak-Fuji model of Sections 4.3 to 4.6, we have assumed that the marginal cost of producing film is $4. Suppose that this marginal cost arises because each roll of film requires 1 hour
Recall the discussion in Section 4.7, part (ii), of trade in which Fujifilm has a cost advantage. Draw a diagram showing the effect of trade on U.S. consumer surplus, Kodak profit, and U.S. social
Consider a market for CDs in a country called Home that has only one producer, Music, Inc. Suppose that the demand curve is given by:Q = 100 - P,where Q is the number of CDs demanded in that country
Recall the discussion of equilibrium in the Bertrand model of Section 4.7, part (iv). Draw a well-marked diagram of the welfare effects of trade in this model. Is trade necessarily welfare improving
In the Citroen-Volkswagen model of question 3, what would the trade equilibrium be if competition was in prices instead of quantities? Compute equilibrium prices, quantities, profits, consumer
Identify an occupation that requires sector-specific skills and another whose skills are not sector specific. For each, explain your reasoning. Do these differences in the mobility of skills change
Consider the following thought experiment regarding foreign direct investment and specific factors. (a) In the pure specific-factors model in the text, suppose that a wave of foreign direct
Suppose that we have data on wages for workers in hundreds of Brazilian industries at two dates. We also have data on each industry's import tariff at each date. Suppose that tariffs change between
Consider an economy that produces tea and rice. Each requires a different type of land, so the flat, low-lying flood land used for rice is a factor specific to rice and the hilly land used for tea is
In the model of question 44, suppose that instead of an import tariff, the government had imposed a 50% tax on exports of tea. Repeat the analysis. How do the outcomes compare with the case of the
Consider an economy in which two factors of production, labor and capital; produce two goods, capital-intensive pharmaceuticals and labor-intensive clothing. Suppose that both factors of production
To the model of U.S.-China trade presented in Section 6.2, add a third country, called Colombia. Suppose that the Colombian economy has 90 million unskilled workers and 60 million skilled workers,
Suppose the world is a Heckscher-Ohlin model with two factors of production, skilled and unskilled labor, and many countries that differ in their ratio of skilled to unskilled workers. Suppose that
Home and Foreign both produce cars and food using labor and capital. In each country, both labor and capital are freely mobile across industries. It takes 5 units of labor and 3 units of
Suppose that an economy produces apparel and plastics with skilled and unskilled labor. The economy has 120 units of unskilled labor and 100 units of skilled labor. Under the initial conditions, the
Consider the following two-country model of the market for spinach. All producers and consumers take the price of spinach as given. Home's supply curve for spinach is given bySH = 5 + P,where sH is
For the previous question, find a quota that would have equivalent effects to the $5 tariff. Show the effects, numerically and diagrammatically, on Home and Foreign welfare (a) under the assumption
Again for the same model, suppose that Home does not impose any trade policy, but Foreign provides a $5 per ton export subsidy.(a) Analyze the effects on the equilibrium, showing how the Foreign
Draw the figure showing the marginal effect on the importing-country welfare of a small increase in tariff as in Figure 7 .12, starting with a tariff of zero. Can you be sure whether or not the
U.S. policy makers must consider the elasticity of export supply from the rest of the world in formulating sugar policy. Suppose that in the rest of the world there are 1,000,000 consumers of sugar,
Using the parameters for the U.S.-ROW sugar model detailed in Section 7 .2, create a figure that plots U.S. social welfare on the vertical axis against the tariff level on the horizontal axis. Using
Examine how the "optimal" tariff might change with different priorities of the political decision makers as follows. Again, use the parameters for the U.S.-ROW sugar model. (a) Plot unweighted
Consider a country that is a net importer of oranges, in a partial-equilibrium comparative advantage model of the same type as the U.S.-ROW sugar model in the text. This is a country that does
In February 1996, President Bill Clinton signed the Telecom munications Act, which (among many other things) required all TV sets sold in the United States to be equipped with a V-chip, which allows
Consider a model with two countries, Home and Foreign, and two goods, X and Y. The demand curve for each good in each country is given by: D = 50 - P,Where D is the quantity supplied and P is the
In the previous problem, suppose that we increase the size of Foreign by multiplying the Foreign demand and supply curves all by the same large number. (a) Recalling the discussion of tariffs and
Returning to Problem 2, suppose that good X is a consumption good with a negative consumption extemality (for example, automobiles, which create local air pollution), so the Foreign government
In the model of the sham problem in Section 8.4, would there be any role for multilateral cooperation on environmental policy if AProd = 1? Explain in detail why or why not.
Recall the "trade data spreadsheet.xis" used in the problems for Chapter 1. For each country, compute GDP per capita, and then find the rate of growth of GDP per capita from 1971 to 2001. ('These are
Consider a country, called Home, that is thinking about starting up a semiconductor chip industry. There are already many producers of the chips in other countries, and there are initially no
Now, consider the model of the previous problem with the following small changes. There are initially no semiconductor chip producers in Home, but two firms in Home would be willing to invest in chip
Recall the model of learning by doing in Section 9.3. Draw a box with g measured on the horizontal axis and r measured on the vertical axis. Show the part of the box where the blue-jeans job would be
Consider a world with two goods, corn and electronics, and two identical countries, Home and Foreign.There is only one factor of production, labor, and there are 1,500 workers in each country, each
In the model of Question 5, suppose that under autarky there are 900 workers making electronics in Home. Foreign is slightly larger, and after trade is opened up between the two countries, only 600
Write down three industries in which you suspect that strategic trade policy is a tool that governments could potentially use, and three in which you suspect that it is not. Explain your reasoning in
A key argument made by policy makers for trade protection is the preservation of jobs in the affected industry. Going through the different examples in this chapter, what are the cases in which
Consider the market for transistors, which are produced in Home by firm H and in Foreign by firm F. These are only two countries in the world. In either country, the demand curve for transistors
For the model of Question 3, suppose that the Home government convinces the foreign government to impose a VER on the F firm. (a) Suppose that the VER restricts F's exports to be no more than its
Again for the model of Question 3, suppose that the Home government provides a $1 per transistor export subsidy to the H firm. (a) Show how this changes the equilibrium, computing the new equilibrium
Now consider the model of Question 3, with the important modification that the industry is now a price-setting Bertrand oligopoly. Analyze the effect of a $1 per transistor import tariff imposed by
Again with the Bertrand oligopoly of Question 6, consider a VER in which Foreign limits the F firm's exports to be no greater than they were under free trade. Use the Stackelberg leader
Again with the Bertrand oligopoly of Question 6, suppose that Home provides the H firm with a $1 per transistor export subsidy.(a) Analyze the effect on both firms' sales and profits, as well as
Oligopoly, Increasing Returns, Tariffs and FD/. Recall from Chapter 3 that one motivation for setting up a branch plant in a foreign country is to avoid transport costs and tariffs, but this has to
Think of a domestic corporation that produces some product that you know, and create a list of some of the tasks that are required to create the product and bring it to domestic consumers. Divide the
Re-create Figure 11.6.(a) Shade in the area of the diagram indicating total national income (without offshoring), distinguishing income to multinational firms, non multinational firms, and
For this question, use the spreadsheet "multinational employment.xls." (a) Recall that Slaughter made a point that over the course of his data, "for every one job that U.S. multinationals created
Consider the following simple offshoring model of the type described in Section 11.2. The United States and Mexico both produce radios, using skilled and unskilled labor. Each radio requires three
Suppose that a small open economy produces Good X and Good Y using skilled and unskilled labor. Each unit of Good X requires 1 unit of skilled labor and 4 units of unskilled labor, of which 1 unit of
Consider a model of immigration with labor complementarity presented in Figure 12.2. Suppose that the demand for domestic labor in meatpacking is perfectly inelastic (because there are only so many
General-equilibrium effects with labor complementarity. Consider an economy comprised of 100 cities. Each city initially contains 1 million each of high school dropouts, high school graduates,
Consider the model of trade between the United States and China presented in Chapter 6. Suppose that we alter that model by assuming that 6 million unskilled workers move from China to the United
Recall Figure 12.3, showing the effect of immigrants on the net income of the native-born population, and redraw it with a larger number of immigrants than is already depicted in the figure. Show how
Post-hoc logic is a logical fallacy in which the inferrer concludes that because A happened after B, B must have caused A. Consider the two following examples. (a) In the years since the second wave
Can you provide a reason globalization might give a government an incentive to use tougher than-optimal environmental regulation? Can you provide a reason globalization might give a government an
Consider the model of Section 13.2. Suppose that θ is initially positive but increases due to tightening emissions regulation (choose either the case θ < θ* or θ > θ* and stick to it).
Given your analysis of the previous question, what is the effect of the increase in θ on world pollution?
Now, suppose that U.S. policymakers do not actually care about pollution, but merely about real purchasing power of U.S. incomes. What is the effect of an increase in θ on the terms of trade, and on
Suppose we can take as given an empirical finding that increased trade openness reduces child labor somewhat in the export sectors and increases it somewhat in import-competing sectors. Can you think
Consider the household model of Section 14.1.2. Suppose that each household has A = 40 hours of adult time and C = 60 hours of children's time to allocate between labor and leisure. The price of
Now, repeat Question 2, but with the following different assumption on preferences. If we denote goods consumption by G and leisure by L, assume that the household's preferences are such that the
Consider the theory of democratization described in Section 14.3.2. In the world economy described in Question 2 of Chapter 6, with the United States, China, and Colombia, suppose that initially
Think of the idea explored by some researchers, summarized in Section 14.3.4, that increased competition through trade can reduce employment discrimination. Specifically, assume that some employers
Suppose that there are two goods, clothes and mobile phones, and two factors of production, skilled and unskilled labor. There are three countries: Sweden, with a high ratio of skilled to unskilled
The demand curve for spark plugs in the United States is given by Q = 100 - P, where Q indicates the number of spark plugs purchased and P is the price. Suppose that there are no spark plugs produced
Consider a model such as in Krishna (2003). Suppose that utility functions are such that a I-percentage-point reduction in Country 1's tariff on Country 2's good will always increase Country 1's
Suppose that lithium-ion batteries are produced by three firms, one each in Countries A, B, and C. The firms are called Firm A, Firm, B, and Firm C, respectively. Each firm produces with a marginal
In Table 16.1, pick a row that is part of the current account and assume that the value in that row goes up by $100 billion. Explain four different ways that other rows in the table could change so
Recall from Section 16.2 that a country can have a trade surplus or a trade deficit even in a static model if there is some sort of international transfer. Think of three real-world examples of such
In a many-country static trade model, suppose that country i receives a transfer of income from country j and there are no other intergovernmental transfers. Does this imply that i will have
From the 'trade flows data.xis' spreadsheet, identify a country with a trade deficit (other than the United States) and another with a trade surplus. Comment on what may be driving this deficit or
Recall from Chapter 9 the model of learning by doing in the production of memory chips. Suppose that an economy has just entered large-scale production of these chips, and that a large fraction of
Consider the two-period com economy of the text. Suppose that initially the equilibrium has a zero trade deficit. Now, increase the interest rate. Show how the Fisher diagram changes. Will trade
Do poor countries run trade deficits? Consider again the two-period com economy. Suppose that initially the equilibrium has a zero trade deficit, and draw the Fisher diagram. Now, on the same
Can protectionism cause trade deficits? Recall the model of U.S.-China trade presented in Chapter 6, in which the United States exports plastics to China and China exports apparel to the United
Pick a pair of countries and download data on their exchange rate, from a site such as oecd.org or econstat.com. Plot the exchange rate over time, and describe briefly the main features of the
Suppose that a newspaper commentator calls for a quick devaluation of the U.S. dollar as a temporary boost to the U.S. economy in order to get it out of a slump. Could you endorse such a suggestion?
In the flexible-price model of Section 17 .3, suppose that the nominal interest rate in China is 15% and the nominal interest rate in the United States is 10%.(a) Which currency is expected to
Consider two countries, East and West, that produce and trade two goods, Food and Clothing, using skilled and unskilled labor. Each unit of Food requires 1 unit of unskilled labor and 2 units of
In the East and West economy described in the previous question, with both money supplies equal to 1 million units of currency, suppose that 300,000 unskilled workers move from East to West. Repeat
Again, consider the East and West economy, in its first version of Question 4 with equal money supplies in the two countries. Suppose that at date 0 a technological breakthrough is announced that
For the fiscal example of Section 17.4.5, what would the outcome be if the U.S. government simply taxed each U.S. household to pay for the public works project? Specifically, suppose that at the
Again for the fiscal example of Section 17.4.5, calculate each U.S. worker's consumption of the two goods with x = 0 and with x = 1. How would you describe the effect of the PBC's currency
Justin owned four speedboats named Porpoise, Priscilla, Providence, and Prudence. On April 2, Justin made written offers to sell the four boats in the order named for $14,200 each to Charles, Diane,
Justin owned four speedboats named Porpoise, Priscilla, Providence, and Prudence. On April 2, Justin made written offers to sell the four boats in the order named for $14,200 each to Charles, Diane,
On April 8, Crystal received a telephone call from Akers, a truck dealer, who told Crystal that a new model truck in which Crystal was interested would arrive in one week. Although Akers initially
On November 15, Gloria, Inc., a manufacturer of crystal ware, mailed to Benny Buyer a letter stating that Gloria would sell to Buyer one hundred crystals "A" goblets at $100 per goblet and that "the
Glen Haumont, who owned an equipment retail business in Broken Bow, Nebraska, owed the Security State Bank more than $628,000 due to improper selling practices as well as business and inventory
a. William tells Carol that he paid $150,000 for his farm in 2008, and that he believes it is worth twice that at the present time. Relying upon these statements, Carol buys the farm from William for
Etta Mae Paulson died on January 31, 2014, leaving four children: Ken, Donald, Barbara, and Larry. She had purchased a home in Rainier in 2009, for $21,300. At that time, she had a will that she had
Dorothy mistakenly accused Fred's son, Steven, of negligently burning down Dorothy's barn. Fred believed that his son was guilty of the wrong and that he, Fred, was personally liable for the damage,
Tender Loving Care, Inc. (TLC), a corporation owned and operated by Virginia Bryant, eventually went out of business. The Secretary of State canceled its corporate charter, and a check drawn on TLC's
In February, Brady, a general contractor, signed a written contract with the Fulghums to build for them a house in North Carolina. The contract price of the house was $206,850, and construction was
On July 5, 2014, Bill and George entered into a bet on the outcome of the 2014 congressional election. On January 28, 2015, Bill, who bet on the winner, approached George, seeking to collect the
G.A.S. married his wife, S.I.S., on January 19, 1997. He began to have mental health problems in 2010; that year, he was hospitalized at the Delaware State Hospital for eight weeks. Similar illnesses
A fifteen-year-old minor was employed by Midway Toyota, Inc. On August 18, 2013, the minor, while engaged in lifting heavy objects, injured his lower back. In October 2013 he underwent surgery to
Haydocy Pontiac sold Jennifer Lee a used automobile for $7,500, of which $6,750 was financed with a note and security agreement. At the time of the sale, Lee, age twenty, represented to Haydocy that

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