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The author or concept searched is found in the following 4 entries.
| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Manpower Policy | Brander | Krugman III 158 Manpower policy/Brander/Spencer/Ulph/Winters: high tech sector: The market for the output of this sector is the world market, of which the particular economy is only a very small part. Because of the fixed costs of R&D there are only a few major international firms competing in this market, so it is inherently imperfectly competitive. >Research and Development (R&D). However, because in R&D success breeds success, entry cannot prevent these major firms from enjoying supernormal profits or rents even after deduction of the costs of R&D. The simplest way of capturing this in our model is to operate with a fixed number of firms. Cantwell (1989a)(1) provides the most recent evidence and a good discussion of this persistence phenomenon. Taken together these assumptions mean that the model is essentially one in which countries are in competition with one another through their manpower and industrial policies to get as large a share of these rents from the international market as they can. >Manpower policy, >Industrial policy, >International trade, >Competition, >Progress, >Technical progress, >New trade theory. Brander and Spencer: This framework is essentially that used by Brander and Spencer (1983)(2) in their argument for support of R&D. VsSpencer, B./VsBrander, J.: As is well known, there are a number of objections to the Brander and Spencer analysis. Dixit and Grossman (1986)(3) show that it depends crucially on the assumption that scientific manpower is essentially in perfectly elastic supply to the high-tech sector. They show that if it is completely inelastic and immobile, then support to the high-tech sector has to be very carefully targeted to have a beneficial effect. While concerns over skill shortages are captured by the inelastic supply assumption, the “brain drain” phenomenon suggests that the immobility assumption is unrealistic. We show that if scientific manpower is mobile then, while support to any arbitrary high-tech industry could be damaging, a policy giving more general support to the high-tech sector as a whole will be beneficial. We extend this to consider the arguments for policy when it is science that is mobile, with companies setting up their R&D labs at centers where scientific manpower is concentrated. These arguments for support of high-tech industries are tested by allowing for the possibility of international spillovers (in which case it may pay to free- ride on the R&D of other countries), and by having research undertaken by internationally mobile scientists while development is performed by immobile engineers. >Free-rider problem. 1. Cantwell, J. 1989a. Technological innovation and multinational corporations. Oxford: Basil Blackwell. 2. Brander, J., and B. Spencer. 1983. International R&D rivalry and industrial strategy. Review of Economic Studies 50:707-22. 3. Dixit, A, and G. Grossman. 1986. Targeted export promotion with several oligopolistic industries. Journal of International Economics 21:233-49. David Ulph and L. Alan Winters. „Strategic Manpower Policy and International Trade.“ In: Paul Krugman and Alasdair Smith (Eds.) 1994. Empirical Studies of Strategic Trade Policy. Chicago: The University of Chicago Press. |
EconKrug I Paul Krugman Volkswirtschaftslehre Stuttgart 2017 EconKrug II Paul Krugman Robin Wells Microeconomics New York 2014 Krugman III Paul Krugman Alasdair Smith Empirical Studies of Strategic Trade Policy Chicago: The University of Chicago Press 1994 |
| Manpower Policy | Spencer | Krugman III 158 Manpower policy/Brander/Spencer/Ulph/Winters: high tech sector: The market for the output of this sector is the world market, of which the particular economy is only a very small part. Because of the fixed costs of R&D there are only a few major international firms competing in this market, so it is inherently imperfectly competitive. >Research and Development (R&D). However, because in R&D success breeds success, entry cannot prevent these major firms from enjoying supernormal profits or rents even after deduction of the costs of R&D. The simplest way of capturing this in our model is to operate with a fixed number of firms. Cantwell (1989a)(1) provides the most recent evidence and a good discussion of this persistence phenomenon. Taken together these assumptions mean that the model is essentially one in which countries are in competition with one another through their manpower and industrial policies to get as large a share of these rents from the international market as they can. >Manpower policy, >Industrial policy, >International trade, >Competition, >Progress, >Technical progress, >New trade theory. Brander and Spencer: This framework is essentially that used by Brander and Spencer (1983)(2) in their argument for support of R&D. VsSpencer, B./VsBrander, J.: As is well known, there are a number of objections to the Brander and Spencer analysis. Dixit and Grossman (1986)(3) show that it depends crucially on the assumption that scientific manpower is essentially in perfectly elastic supply to the high-tech sector. They show that if it is completely inelastic and immobile, then support to the high-tech sector has to be very carefully targeted to have a beneficial effect. While concerns over skill shortages are captured by the inelastic supply assumption, the “brain drain” phenomenon suggests that the immobility assumption is unrealistic. We show that if scientific manpower is mobile then, while support to any arbitrary high-tech industry could be damaging, a policy giving more general support to the high-tech sector as a whole will be beneficial. We extend this to consider the arguments for policy when it is science that is mobile, with companies setting up their R&D labs at centers where scientific manpower is concentrated. These arguments for support of high-tech industries are tested by allowing for the possibility of international spillovers (in which case it may pay to free- ride on the R&D of other countries), and by having research undertaken by internationally mobile scientists while development is performed by immobile engineers. >Free-rider problem. 1. Cantwell, J. 1989a. Technological innovation and multinational corporations. Oxford: Basil Blackwell. 2. Brander, J., and B. Spencer. 1983. International R&D rivalry and industrial strategy. Review of Economic Studies 50:707-22. 3. Dixit, A, and G. Grossman. 1986. Targeted export promotion with several oligopolistic industries. Journal of International Economics 21:233-49. David Ulph and L. Alan Winters. „Strategic Manpower Policy and International Trade.“ In: Paul Krugman and Alasdair Smith (Eds.) 1994. Empirical Studies of Strategic Trade Policy. Chicago: The University of Chicago Press. |
Spencer I Herbert Spencer The Man versus the State Indianapolis 2009 EconKrug I Paul Krugman Volkswirtschaftslehre Stuttgart 2017 EconKrug II Paul Krugman Robin Wells Microeconomics New York 2014 Krugman III Paul Krugman Alasdair Smith Empirical Studies of Strategic Trade Policy Chicago: The University of Chicago Press 1994 |
| New Trade Theory | Brander | Krugman III 2 New Trade Theory/Brander/Spencer/Krugman: In the early 1980s James Brander and Barbara Spencer (1983(1), 1985(2)) created a considerable stir with an analysis of trade policy under imperfect competition. The Brander-Spencer analysis did three things. First, it offered a particularly clever way of setting up the case for activist trade policy, one which simplified the issue enormously and thereby revealed its core. Second, it seemed to suggest that the new trade theory provided at least limited support for a kind of neo-mercantilism, for the assertion that governments could in fact raise national income at other countries’ expense by supporting national firms in international competition. Third, and not without importance, the BranderSpencer approach could be succinctly described with a term that, while accurate, seemed to promise a larger prize than Brander and Spencer themselves ever suggested: “strategic trade policy.” What the Brander-Spencer approach actually consisted of was the following: we imagine two firms, from each of two countries, competing for some export market. Domestic consumers in this sector are ignored or assumed away, so that the approach is inherently biased toward a view of trade as competition rather than mutual gain. Krugman III 3 Competition: The firms compete by choosing the level of some strategic variable: perhaps output, perhaps capacity, perhaps R&D. In this kind of competitive situation, firms would like to convince each other of their aggressiveness. That is, each would like the other to believe that it will invest or produce massively, thereby inducing the other to produce or invest less, perhaps even to avoid entering the market at all. The problem is to find a way to make the threat of aggressive competition credible. The answer suggested by industrial organization theorists is that firms will make “strategic” moves-that is, take actions that do not directly raise profits, but that are intended to make aggressive behavior more credible and therefore have a deterrent effect on potential rivals. Solution: The quintessential strategic move is construction of excess capacity, which a firm does not expect to use, but which it builds in order to deter entry of potential competitors. Trade policies: What Brander and Spencer pointed out was that trade policies could serve the same strategic purpose. Suppose that one of the two firms is backed by a government, which commits itself to subsidize the firm’s sales. Then the other firm will know that an aggressive policy by the subsidized firm is rational and will curtail its own plans. The result can be to raise the firm’s profits by much more than the actual subsidy outlay. And as a result, such a “strategic” trade policy can raise the aggressive nation’s income at the other country’s expense. >Interventions, >Interventionism, >Government policy. VsBrander/VsSpencer: The Brander-Spencer analysis nicely cuts through the complexities. But it is also subject to abuse: it has enabled advocates of aggressive trade policies to give their views a new intellectual gloss. Thus the theory of strategic trade policy has been subject to an unusually detailed academic critique, the upshot of which has been to show that what Brander and Spencer offered was an example, not a general result. Eaton and Grossman (1986)(3) showed that the case for strategic aggressiveness was sensitive to the assumed form of competition; Horstmann and Markusen (1986)(4 showed that the benefits of strategic trade policy might be dissipated by entry of new firms and the resulting excess capacity; Dixit and Grossman (1986)(5) showed that competition for scarce resources among industries complicates greatly the task of devising a welfareimproving policy; and Dixit and Kyle (1985)(6) argued that strategic trade policies should be seen as part of a larger game in which it would often be better for governments to rule out their possibility. New Trade Theory: Krugman: What this academic critique showed was not that the strategic trade policy concept was wrong, but that it was not necessarily right. Or to put it more accurately, the case for strategic trade policies was not like the traditional case for free trade, which (in the old trade theory) could be made a priori without consideration of the specific details of industries. Strategic trade policies could be recommended, if at all, only on the basis of detailed quantitative knowledge of the relevant industries. So what the new trade theory gave rise to was not a prescription for policy, but a program of research. >Econometrics, >Imperfect competition, >International trade theory, >New trade theory. 1. Brander, J., and B. Spencer. 1983. International R&D rivalry and industrial strategy, Review of Economic Studies 50:707-22. 2. Brander, J., and B. Spencer. 1985. Export subsidies and market share rivalry. Journal of International Economics 18233-100. 3. Eaton, J., and G. Grossman. 1986. Optimal trade and industrial policy under oligopoly. Quarterly Journal of Economics 101:383-406. 4. Horstmann, I., and J. Markusen. 1986. Up your average cost curve: Inefficient entry and the new protectionism. Journal of International Economics 20:225-49. 5. Dixit, A., and G. Grossman. 1986. Targeted export promotion with several oligopolistic industries. Journal of International Economics 21:233-50. 6. Dixit, A., and A. Kyle. 1985. The use of protection and subsidies for entry promotion and deterrence. American Economic Review 75: 139-52. Paul Krugman. (1994). „Introduction“. In: Paul Krugman and Alasdair Smith (Eds.) Empirical Studies of Strategic Trade Policy. Chicago: The University of Chicago Press. |
EconKrug I Paul Krugman Volkswirtschaftslehre Stuttgart 2017 EconKrug II Paul Krugman Robin Wells Microeconomics New York 2014 Krugman III Paul Krugman Alasdair Smith Empirical Studies of Strategic Trade Policy Chicago: The University of Chicago Press 1994 |
| New Trade Theory | Spencer | Krugman III 2 New Trade Theory/Brander/Spencer/Krugman: In the early 1980s James Brander and Barbara Spencer (1983(1), 1985(2)) created a considerable stir with an analysis of trade policy under imperfect competition. The Brander-Spencer analysis did three things. First, it offered a particularly clever way of setting up the case for activist trade policy, one which simplified the issue enormously and thereby revealed its core. Second, it seemed to suggest that the new trade theory provided at least limited support for a kind of neo-mercantilism, for the assertion that governments could in fact raise national income at other countries’ expense by supporting national firms in international competition. Third, and not without importance, the BranderSpencer approach could be succinctly described with a term that, while accurate, seemed to promise a larger prize than Brander and Spencer themselves ever suggested: “strategic trade policy.” What the Brander-Spencer approach actually consisted of was the following: we imagine two firms, from each of two countries, competing for some export market. Domestic consumers in this sector are ignored or assumed away, so that the approach is inherently biased toward a view of trade as competition rather than mutual gain. Krugman III 3 Competition: The firms compete by choosing the level of some strategic variable: perhaps output, perhaps capacity, perhaps R&D. In this kind of competitive situation, firms would like to convince each other of their aggressiveness. That is, each would like the other to believe that it will invest or produce massively, thereby inducing the other to produce or invest less, perhaps even to avoid entering the market at all. The problem is to find a way to make the threat of aggressive competition credible. The answer suggested by industrial organization theorists is that firms will make “strategic” moves-that is, take actions that do not directly raise profits, but that are intended to make aggressive behavior more credible and therefore have a deterrent effect on potential rivals. Solution: The quintessential strategic move is construction of excess capacity, which a firm does not expect to use, but which it builds in order to deter entry of potential competitors. Trade policies: What Brander and Spencer pointed out was that trade policies could serve the same strategic purpose. Suppose that one of the two firms is backed by a government, which commits itself to subsidize the firm’s sales. Then the other firm will know that an aggressive policy by the subsidized firm is rational and will curtail its own plans. The result can be to raise the firm’s profits by much more than the actual subsidy outlay. And as a result, such a “strategic” trade policy can raise the aggressive nation’s income at the other country’s expense. >Interventions, >Interventionism, >Government policy. VsBrander/VsSpencer: The Brander-Spencer analysis nicely cuts through the complexities. But it is also subject to abuse: it has enabled advocates of aggressive trade policies to give their views a new intellectual gloss. Thus the theory of strategic trade policy has been subject to an unusually detailed academic critique, the upshot of which has been to show that what Brander and Spencer offered was an example, not a general result. Eaton and Grossman (1986)(3) showed that the case for strategic aggressiveness was sensitive to the assumed form of competition; Horstmann and Markusen (1986)(4 showed that the benefits of strategic trade policy might be dissipated by entry of new firms and the resulting excess capacity; Dixit and Grossman (1986)(5) showed that competition for scarce resources among industries complicates greatly the task of devising a welfareimproving policy; and Dixit and Kyle (1985)(6) argued that strategic trade policies should be seen as part of a larger game in which it would often be better for governments to rule out their possibility. New Trade Theory: Krugman: What this academic critique showed was not that the strategic trade policy concept was wrong, but that it was not necessarily right. Or to put it more accurately, the case for strategic trade policies was not like the traditional case for free trade, which (in the old trade theory) could be made a priori without consideration of the specific details of industries. Strategic trade policies could be recommended, if at all, only on the basis of detailed quantitative knowledge of the relevant industries. So what the new trade theory gave rise to was not a prescription for policy, but a program of research. >Econometrics, >Imperfect competition, >International trade theory. 1. Brander, J., and B. Spencer. 1983. International R&D rivalry and industrial strategy, Review of Economic Studies 50:707-22. 2. Brander, J., and B. Spencer. 1985. Export subsidies and market share rivalry. Journal of International Economics 18233-100. 3. Eaton, J., and G. Grossman. 1986. Optimal trade and industrial policy under oligopoly. Quarterly Journal of Economics 101:383-406. 4. Horstmann, I., and J. Markusen. 1986. Up your average cost curve: Inefficient entry and the new protectionism. Journal of International Economics 20:225-49. 5. Dixit, A., and G. Grossman. 1986. Targeted export promotion with several oligopolistic industries. Journal of International Economics 21:233-50. 6. Dixit, A., and A. Kyle. 1985. The use of protection and subsidies for entry promotion and deterrence. American Economic Review 75: 139-52. Paul Krugman. (1994). „Introduction“. In: Paul Krugman and Alasdair Smith (Eds.) Empirical Studies of Strategic Trade Policy. Chicago: The University of Chicago Press. |
Spencer I Herbert Spencer The Man versus the State Indianapolis 2009 EconKrug I Paul Krugman Volkswirtschaftslehre Stuttgart 2017 EconKrug II Paul Krugman Robin Wells Microeconomics New York 2014 Krugman III Paul Krugman Alasdair Smith Empirical Studies of Strategic Trade Policy Chicago: The University of Chicago Press 1994 |
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