figure 14.4 n 2 manufacturing firms n 2 varieties (elasticity ) internal returns to scale...
TRANSCRIPT
Figure 14.4
N2 manufacturing firmsN2 varieties (elasticity )internal returns to scalemonopolistic competition
N1 manufacturing firmsN1 varieties (elasticity )internal returns to scalemonopolistic competition
Farms in 1 Farms in 2
Spe
ndin
g
1-m
m
Manufacturing workers in 2
Farm workers in 2
Consumers in 2
Farm workers in 1
Consumers in 1In
com
e
Spe
ndin
g
(goo
ds)
(far
m la
bor)
(lab
or)
Inco
me
(lab
or)
Inco
me
Spending on manufactures
Spe
ndin
g on
foo
d
Inco
me
(far
m la
bor)
Spe
ndin
g on
foo
d
1-m m Spending on
manufactures
(goo
ds)
T
a
c
b
de
f
Direction of (goods and services flows)
Direction of money flows
Mobility (i)
g
Manufacturing workers in 1
Laborers in the manufacturing sector in region 2; 2mL
Laborers in the manufacturing sector in region 1; 1mL
Laborers in the food sector in region 1; 1(1- m)L
Laborers in the food sector in region 2; 2(1- m)L
Laborers in the food sector (1- m)L
Laborers in the manufacturing sector; mL
Total number of laborers; L
(1-m) m
1 2 1 2
Note: 1 + 2 = 1 Note: 1 + 2 = 1 Mobility
Sustain points
Break point
Transport costs T10
1
1
0.5
Stable equilibria
Unstable equilibria
B
S0
S1
Basin of attraction for spreading equilibrium
Basin of attraction for agglomeration in region 1
Basin of attraction for agglomeration in region 2
Figure 14.9
Foreign Direct Investment
Greenfield Investments Mergers and Acquisitions (M&A)
Mergers Acquisitions
Full acquisition (100%)
More than 50% acquistion
10% - 49% acquisition
22% 78%
3% of M&A 97% of M&A
65% of M&A 15% of M&A 16% of M&A
Figure 15.3
Headquarters in Austria
Headquarters in Bolivia
Firm level fixed costs FwA
Firm level fixed costs FwB
Plant level fixed costs GwA
Plant level fixed costs GwB
Plant level fixed costs GwA
Plant level fixed costs GwB
+
Multi-plant production?
mB; multinational firm, headquarters in Bolivia
MC in A = cwA
MC in B = cwB
mA; multinational firm, headquarters in Austria
MC in A = cwA
MC in B = cwB
nB; national firm, headquarters in Bolivia
MC in A = (c+t)wB
MC in B = cwB
nA; national firm, headquarters in Austria
MC in A = cwA
MC in B = (c+t)wA
Multi-plant production?
+
yesyesno no
Headquarter location
nA firms?
nB firms? nB firms?
mA firms? mA firms?mA firms? mA firms?
mB firms?mB firms? mB firms? mB firms? mB firms? mB firms? mB firms? mB firms?
3 4 5 6 8721 9 10 11 12 13 14 15 16
yes
yes
yes
yes
yes
yes
yesyesyesyes
yes
yesyesyes
yes
nonononono nonono
no nonono
no no
no
Multinational firms only
nA nA nAnAnAnA nAnAnB nB nBnBnB nB nB nBmA mA mA mAmA mAmA mAmB mBmBmB mB mBmB mB
Mixed MixedMixed
National firms only
Figure 15.9
labor
capi
tal
OA
OB
Austria largeBolivia small
Austria smallBolivia large
Austria capital abundantBolivia labor abundant
Austria labor abundantBolivia capital abundant
C
Figure 15.10
.95
.90
.80
.85
.75
.70
.65
.30
.35
.60
.55
.50
.45
.40
.25
.15
.10
.05
.20
.95.90.80 .85.75.70.65.30 .35 .60.55.50.45.40.25.15.10.05 .20
Endowment of labor
End
owm
ent o
f ca
pita
l
OA
OBa. Base scenario
National firms only
Mixed regimes
Multi-national firms only
Figure 15.11a
.95
.90
.80
.85
.75
.70
.65
.30
.35
.60
.55
.50
.45
.40
.25
.15
.10
.05
.20
.95.90.80 .85.75.70.65.30 .35 .60.55.50.45.40.25.15.10.05 .20
Endowment of labor
End
owm
ent o
f ca
pita
l
OA
OBb. Smaller countries; 40%
National firms only
Mixed regimes
Multi-national firms only
Figure 15.11b
Substrate
Media
Motors
Head-Stack Assembly
Head-Gimbal Assembly
Head Fabrication
Semiconductors PCB Stuffing and Other Electronics Assembly
Head-Disk Assembly
Final Assembly
Testing
Component Fabrication Activities
Subassembly Activities Final Assembly Activities
Figure 15.12
good X
good Y
A
B
ppf
Figure 16.2
Number of varieties
quantity
q
Nt = 0 Nt = 1
Figure 16.3
variety
quality
1 2 3 4 5 9876 1413121110 1615
1
4
3
2
7
6
5
10
9
8
11
12
quality at t = 1
quality at t = 0
Figure 16.4
Food
Manufactures
PrA
PrB
CA
CB
ppfA
ppfB
AM
FBM
F
slope = - pm/pf
Figure 17.2
Figure 17.3
CC
A A
quantity
demand supplyprice
q0 q1 q4q3q2
p0
p0(1+t0)
imports with free trade
imports with tariff t0
p0(1+t1)
imports with tariff t1
q5
BB
quantity
price
demand
Dupuit triangle
q
p
qmax
pmax
O
A
Figure 17.6
quantity
price
demand
Dupuit triangle
q0
p
qmax
pmax
O
E0
p+tE1
Harberger triangle
q1
Figure 17.7