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Abstract

This paper analyzes the role of seller-induced shortage as a signal of quality. Unlike dissipative advertising, the cost of inducing shortage is different for different quality types. It is shown that under certain conditions, a high-quality monopoly firm that signals quality by inducing shortage makes more profit than using price alone or combined with dissipative advertising. This is because the forgone profit from the lost sales is always lower for the high-quality firm than for the lowquality firm. The result explains why high-quality firms may prefer to initially limit supply with a price weakly lower than that in the complete-information case.

Abstract

I analyze the interaction between post-election lobbying and the voting decisions of forward-looking voters. The existing literature has shown that in models with ciitzen candidates form a dispersed distribution of preferences, lobbying has no influence on implemented policy. In my model with ideological parties, lobbying is shown to have an effect on policy. In terms of welfare, I show that the median voter and the majority of voters are often better off with lobbying.

Abstract

How do producers that export their goods directly differ from those that export through trade intermediaries? We take a standard model of trade with heterogeneous firms and add heterogeneity in quality to the usual heterogeneity in productivity. Modeling trade intermediaries as increasing marginal costs but decreasing fixed costs of exporting, we find that only firms with the highest quality-adjusted productivity levels choose to export directly. Under certain parameter restrictions, the model shows that direct exporters tend to be larger and charge higher prices for their goods. In contrast to the literature, using Chinese customs data, we confirm that direct exporters do charge higher prices for their goods.

Abstract

Using a dynamic national computable general equilibrium model, we investigate the impact of carbon tax and energy efficiency improvement on the economy and environment of China. The Chinese social account matrix is presented based upon the latest input-output table (2012 IO table) and other data. The business as usual (BAU) scenario is designed according to several forecasts about China by 2030, followed by six policy scenarios, including different levels of carbon tax and technological progress as well as their combinations. The results show that carbon tax will frustrate the overall economic growth slightly. The CO2 emission will be 13.81% lower in 2030 compared to BAU case if the carbon tax scheme is carried out at at rate of 200 RMB/ton of CO2. Technological progress will stimulate the economic growth, enrich the household and government income, increase total investment and make most sectors prosperous with the exception of energy industries.

Abstract

In this paper, we reassess the impact of inequality on growth, The majority of previous papers have employed (system) GMM estimation. However, recent simulation studies indicate that the problems of GMM when using non-stationary data such as GDP have been grossly underestimated in applied research. Concerning predetermined regressors such as inequality, GMM is outperformed by a simple least square dummy variable estimator. Additionally, new data have recently become available that not only double the sample size compared to most previous studies but that also address the substantial measurement issues that have plagued past research. Using these new data and an LSDV estimator, we provide an analysis that both accounts for the conditions where inequality is beneficial or detrimental to growth and distinguishes between market-driven inequality and redistribution. We show that there are situations where market inequality affects growth positively while redistribution is simultaneously beneficial.