Cost complementarities arise from synergies in the production of heterogeneous goods. It is shown that synergies can be accounted for in terms of shared public inputs (roughly) if and only if synergies decrease as the scope of production increases. This case of ‘‘substitutive’’ synergies is argued to be typical. The key technical tool is a novel interpretation of conjugate Moebius inversion in ...

The paper estimates an empirical relation based on Krugman’s “technological gap” model to explore the influence of the pattern of international trade and production on the overall productivity growth of a developing country. A key result is that increased import competition in medium-growth (but not in lowor highgrowth) manufacturing sectors enhances overall productivity growth. The authors als...

In this paper, we examine the welfare properties of strategic fragmentation under production subsidies. We first consider a case in which a production subsidy rate is given exogenously. We show that, under the fixed subsidy policy, firms choose fragmentation despite the domestic production being socially desirable. Next, we examine a situation in which the government chooses a production subsid...

We consider a Cournot oligopoly setting in which consumers have an intrinsic preference for variety, while unit production costs of firms increase with the number of goods they produce. This environment exhibits a general under-provision of variety with respect to social welfare. JEL Classification Numbers: C70, L13, L20

In this paper, I explore the effect of fragmentation of production processes on social welfare in the imperfectly competitive market. In particular, I examine the welfare properties of fragmentation from the viewpoint of industrialized countries. Firms located at a country decide whether they produce at home or move their production overseas. I show that there exists Nash equilibrium in which a...

We analyze the interaction between risk sharing and capital accumulation in a stochastic OLG model with production. We give a complete characterization of interim Pareto optimal competitive equilibrium allocations. Furthermore, we provide tests of Pareto optimality/suboptimality based on (risky) rates of return only. © 2007 Elsevier Inc. All rights reserved. JEL classification: D61; D91; E13; E43

A dominant firm holding import quota engages in inter-temporal price discrimination when facing a competitive fringe engaged in seasonal production. This causes a welfare loss that comes in addition the loss attributable to limitation of imports below the free trade level. JEL classification: F12, F13

This paper discusses those sources of endogenous growth arising from labor as labor. It uses a production function which models the returns to scale as a function of the division of labor and learning. Smithian analysis of the labor process constitutes the basis upon which we build our own approach. © 2001 Elsevier Science B.V. All rights reserved. JEL classification: D24; J24; O41

School Quality, Educational Attainment and Aggregation Bias Data from 31 countries participating in the Programme for International Student Assessment (PISA) is used to estimate education production functions for reading literacy. The analysis suggests that the probability of finding statistically significant and correctly signed class size effects increases the higher the level of aggregation ...

The present paper thoroughly explores second-best efficient allocations in an adverse selection insurance economy. We start from a natural extension of the classical model, assuming less than perfect risk perceptions. We propose first and second welfare theorems, by means of which we describe efficiencyenhancing policies. Notions of weak and strong adverse selection are promising for interpreti...