Industrial Organization, Trade, and Social Interaction

Industrial Organization, Trade, and Social Interaction: Essays in Honour of B. Curtis Eaton

Gregory K. Dow
Andrew Eckert
Douglas S. West
Copyright Date: 2010
Pages: 336
https://www.jstor.org/stable/10.3138/9781442698666
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  • Book Info
    Industrial Organization, Trade, and Social Interaction
    Book Description:

    Not only a collection of laudatory essays,Industrial Organization, Trade, and Social Interactionpresents cutting edge research by leading scholars.

    eISBN: 978-1-4426-9866-6
    Subjects: Economics, Marketing & Advertising, Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. PART I: B. CURTIS EATON:: HIS IMPACT ON ECONOMICS AND ECONOMISTS

    • 1 Introduction
      (pp. 3-15)
      GREGORY K. DOW, ANDREW ECKERT and DOUGLAS S. WEST

      On 4 and 5 June 2008, a conference in honour of B. Curtis Eaton, one of Canada’s leading microeconomists, was held at Simon Fraser University’s downtown Vancouver campus. Economists from across Canada and beyond came together to recognize Curt’s contributions to teaching, learning, and the economics profession over a career that so far has spanned some 40 years. For the conference, 12 original works were solicited from among those who were present at the conference or who are colleagues, co-authors, or students of Curt’s.

      B. Curtis Eaton received his BA and PhD degrees from the University of Colorado in 1965...

    • 2 B. Curtis Eaton’s Contributions to the Economics of Information
      (pp. 16-30)
      RICHARD G. LIPSEY

      One of the most significant new lines of enquiry in economic theory over the past 50 years has been the development of the economics of imperfect information. George Akerlof is generally credited with starting the modern development with his seminal article, ‘The Market for Lemons: Quality Uncertainty and the Market Mechanism’ (1970). The 2001 Nobel Prize, awarded to Akerlof, Michael Spence, and Joseph Stiglitz, recognized the importance of this subject and the contributions made by these three economists. In this paper, I review the many significant contributions that Curtis Eaton and several of his co-authors have made to this literature....

  4. PART II: INDUSTRIAL ORGANIZATION AND SPATIAL COMPETITION

    • 3 Entry Deterrence via Contracts
      (pp. 33-59)
      RALPH A. WINTER

      When do buyers and an incumbent supplier in a market have the incentive to enter into contracts that deter entry by other suppliers? This chapter offers an overview of recent developments in the economic theory addressing this question. This is a natural topic for a book in honour of Curt Eaton since the topic is in the intersection of two areas of economic theory to which Curt has made important contributions: strategic models of entry and entry deterrence; and applied contract theory.¹

      Research on the topic has been active in the economic literature, especially since Aghion and Bolton (1987). And...

    • 4 The Spatial Evolution of Alberta’s Privatized Liquor Store Industry
      (pp. 60-83)
      ANDREW ECKERT and DOUGLAS S. WEST

      In a 1977 paper, Eaton and Lipsey discussed the research program they had initiated several years previously and identified two themes: that economic activity is a spatial phenomenon, and that it is characterized by physical and temporal indivisibilities. Incorporating these assumptions into economic models allowed Eaton and Lipsey to produce a series of papers that enhanced our understanding of structure and conduct in real markets. Commencing with extensions of the hotelling model (Eaton and Lipsey 1975), they further employed spatial competition analysis to help us understand the formation of shopping centres (Eaton and Lipsey 1979a, 1982) and the possibilities for...

    • 5 Shopper City
      (pp. 84-112)
      RICHARD ARNOTT and YUNDONG TU

      One of the authors of this paper recently has participated in the development of a large-scale, microeconomic metropolitan simulation model (tentatively called METRO-LA) that aims to forecast transportation, land use, and pollution in the Los Angeles metropolitan area. One of the many modelling questions that have arisen is how retail location should be modelled at such a geographic scale. The literature on retail location that is most familiar to economists is strategic firm location theory/spatial competition theory, to which Curtis Eaton has made distinguished contributions, many in co-authorship with Richard Lipsey.² Models in this literature solve for the Nash equilibrium...

  5. PART III: TRADE AND PRODUCTIVITY

    • 6 The Interaction between Education, Skilled Migration, and Trade
      (pp. 115-135)
      RICHARD G. HARRIS and PETER E. ROBERTSON

      The subject of this paper is the interaction between migration and human capital. These are both fields in which Curt Eaton has made important contributions – albeit under very different assumptions regarding information completeness and market structure.¹ Likewise, our central research question will be familiar to any of Curt’s students – that is, how do individuals respond to the institutions they face? Specifically, in this paper, the central question is, how do individuals adjust their education decisions to changes in skilled immigration in a small, open economy?

      Over the past decade, flows of skilled labour from developing to developed countries have increased...

    • 7 Differentiated Products, International Trade, and Simple General Equilibrium Effects
      (pp. 136-159)
      SIMON P. ANDERSON and NICOLAS SCHMITT

      Several papers¹ have shown that, over the past 20 years, the share of intra-industry trade in vertically differentiated products has increased significantly at the expense of both one-way trade and intra-industry trade in horizontally differentiated products. This phenomenon was first identified for trade flows among members of the European Union (where vertical intra-industry trade is about 40 per cent of total trade) and more recently for a wide range of country pairs (Fontagné, Freudenberg, and Gaulier 2006). Although the methodology adopted to separate trade into vertically and horizontally differentiated products based on unit prices is largely ad hoc, this phenomenon...

    • 8 A Tale of Two Cities: Cyclical Movements in Price and Productivity in Mining and Manufacturing
      (pp. 160-180)
      HARRY BLOCH

      Over the past several decades, Curtis Eaton has been at the forefront of a revolution in microeconomic theory. This revolution has shifted the focus of analysis from the general equilibrium of competitive economies to the dynamics of strategic interaction in partially localized markets. In the process, imperfect competition has replaced perfect competition as the primary focus of research in microeconomics.

      The argument developed in this paper is that imperfectly competitive analysis of the type expounded in Curtis’s research is particularly appropriate for analyzing long-run equilibrium in manufacturing. In this equilibrium, firms operate with price greater than marginal cost, substantial fixed...

  6. PART IV: SOCIAL INTERACTION

    • 9 Image Building
      (pp. 183-202)
      B. CURTIS EATON and WILLIAM D. WHITE

      The economist’s vision of the individual is founded on the notion of private consumption goods. If asked, for example, to think about two women sitting down to have lunch together, most economists would think of the relationship between each woman and her food as a purely private one; in the economist’s eye, what one woman has for lunch has no bearing on the other’s well-being. Garlic aside, this is a sensible working hypothesis for many sorts of consumer choices.

      There is, however, another sort of choice for which the fiction of private consumption goods is definitely not sensible. When one...

    • 10 Worker Participation and Adverse Selection
      (pp. 203-222)
      GREGORY K. DOW

      Worker participation in the management of firms comes in many shades and hues, from quality circles and autonomous work teams to joint consultative committees, works councils, co-determination, and fully worker-controlled firms. It is convenient, however, to imagine a simple continuum running from strongly hierarchical firms at one extreme to strongly participatory firms at the other. In a hierarchical firm, front-line workers have narrowly defined tasks, do what they are told, and receive pay unrelated to the financial performance of the firm as a whole. Full knowledge of the firm’s technology and market environment is confined to upper echelons of management....

    • 11 Signalling Risk Tolerance: Nuclear Arsenals and Alliance Formation in the Cold War
      (pp. 223-242)
      CLIFF T. BEKAR, GREGORY K. DOW, CLYDE G. REED and JOSHUA STINE

      According to deterrence theory, the most important function of nuclear arsenals is to ensure that they are never used.² To achieve deterrence, a state must possess a deterrent arsenal and the credibility to launch it. There is no deterrent value in the accumulation of additional warheads once a state has: (a) threatened the utter destruction of any potential enemy via a nuclear strike; (b) achieved a desirable force mix (in terms of the types and deployment of warheads); and (c) achieved a guaranteed redundant strike capability. Explaining the size of nuclear arsenals would seem to be a straightforward application of...

    • 12 Social Learning in a Model of Adverse Selection
      (pp. 243-271)
      JASMINA ARIFOVIC and ALEXANDER KARAIVANOV

      It is well known from the mechanism design literature that the optimal contracts that arise in environments with asymmetric information can take complicated forms due to the need to satisfy various, typically nonlinear, constraints – such as participation, incentive compatibility, and/or self-selection. Further, these optimal contracts crucially depend on the participating agents’ preferences, the properties of the endowment process or production technology, and various elements of the institutional environment – such as the degree of contractibility, contract enforcement, and agents’ ability to commit. Usually, this literature solves for the best possible contract assuming that certain actions, states, or types are unobservable to...

    • 13 Intertemporal Discounting with Veblen Preferences: Theory and Evidence
      (pp. 272-296)
      MUKESH ESWARAN and ROB OXOBY

      In his classic work,The Theory of the Leisure Class, written more than a century ago, Thorstein Veblen (1899) argued that a considerable part of consumption is motivated by the desire to demonstrate one’s social position. Consumers undertake conspicuous consumption, as he called it, to set themselves apart from others – that is, the goal is not enjoyment of the goods per se but the status their consumption confers. Veblen’s ideas have attracted renewed interest in recent decades. They form the basis of a theory of savings of Duesenberry (1949) and the distinction between ordinary goods and status goods underlying much...

  7. Contributors
    (pp. 297-300)