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Increasing Returns (increasing + return)
Selected AbstractsIncreasing Returns, Labour Utilization and Externalities: Procyclical Productivity in the United States and JapanECONOMICA, Issue 266 2000Michela Vecchi This paper investigates procyclical productivity and attempts to discriminate among several competing explanations. The study focuses on the United States and Japan, since the different industrial relations in these two economies serve to cast a sharper light on the procyclical productivity debate. Labour hoarding, evaluated through the introduction of a labour utilization proxy, proves to be an important influence. The interpretation of the role of external economies remains an open issue. [source] Geographic Concentration and Increasing ReturnsJOURNAL OF ECONOMIC SURVEYS, Issue 5 2003Paolo Surico Abstract., Economic activities are highly clustered. Why is geographic concentration becoming a predominant feature of industrialized economies? On the basis of the empirical models developed by the new theories of international trade, our answer is that increasing returns are the driving force of economic geography in the US as well as in Europe. In so doing, we review several econometric methods proposed in the literature to separate and to test alternative theoretical paradigms. [source] The Geographic Effects of Trade Liberalization with Increasing Returns in TransportationJOURNAL OF REGIONAL SCIENCE, Issue 2 2003Kashif S. Mansori The distinctive features of the model are that transportation is costly between locations within a nation as well as between nations, and that these transportation costs are subject to increasing returns to scale. A result of the model is that trade liberalization may cause the population of a country to become more concentrated in a single megalopolis. The large megalopolis may reduce welfare due to congestion costs, which implies that liberalization may unexpectedly leave the country worse off. [source] Growth Effects of Free Trade under Increasing ReturnsTHE JAPANESE ECONOMIC REVIEW, Issue 4 2002Ilaria Ossella-Durbal This paper addresses the long-term sustainability of the growth effects from trade, within the context of a dynamic optimization model where the investment sector exhibits an initial phase of increasing returns. It is proved that the qualitative properties of trade and growth remain valid, even for decreasing, rather than constant, returns to scale in the consumption sector. That is, trade enables an economy to escape a "poverty trap" and enjoy unbounded growth. Moreover, the asymptotic long-run growth rate of the optimal consumption levels with trade is determined, establishing that trade has a beneficial effect on long-run growth. JEL Classification Numbers: O41, F12. [source] External Transaction Costs and Large-scale Farming in Moscow Oblast Coûts de transaction externes et agriculture à grande échelle dans la région de Moscou Externe Transaktionskosten und landwirtschaftliche Großbetriebe in der Oblast MoskauEUROCHOICES, Issue 2 2010Nikolai SvetlovArticle first published online: 3 AUG 2010 Summary External Transaction Costs and Large-scale Farming in Moscow Oblast The article addresses the reasons for the domination of large-scale corporate farms in the Moscow oblast of Russia and concludes that high external transaction costs are likely to be an important determining factor. Over the nine year period studied, larger farms are shown to achieve higher performance. Increasing returns to scale, however, were not significant in explaining the superior performance of the larger farms. It is hypothesised that high external transaction costs due to lack of transparency in the milk market, typical of underdeveloped markets, give the larger farms a competitive advantage. Their search costs per unit of output are relatively low and they are able therefore to achieve higher farm-gate prices for milk as a result. The results confirm the dependence of the farm-gate milk price on farm size due to the presence of high transaction costs in the market of milk, the major output of the studied farms. The high performance farms were able to grow during the study period whereas the lower performing farms had limited growth capacity. A more competitive and transparent market environment along with improved infrastructure could lower transaction costs and entry barriers and provide opportunities for smaller scale corporate farms to compete more effectively. Cet article essaie d'expliquer les raisons de la domination des grandes exploitations agricoles constituées en société de la région de Moscou et conclut que l'ampleur des coûts de transaction externes est probablement un facteur explicatif important. Au cours de la période étudiée qui couvre neuf années, les exploitations les plus grandes ont enregistré les performances les plus élevées. Les rendements d'échelle croissants n'ont cependant pas expliqué de manière significative la meilleure performance de ces exploitations. Nous faisons l'hypothèse que les forts coûts de transaction externes liés au manque de transparence sur le marché laitier, typique des marchés incomplètement développés, donnent à ces plus grandes exploitations un avantage compétitif. Leur coût de recherche par unité de produit est relativement bas et elles sont donc capables d'obtenir des prix au niveau de la ferme plus élevés pour le lait. Les résultats confirment la dépendance des prix à la ferme envers la taille de l'exploitation du fait de la présence de coûts de transaction élevés sur le marché laitier, le lait étant le principal produit des exploitations étudiées. Les exploitations très performantes ont pu croître au cours de la période examinée tandis que les capacités de développement des exploitations les moins performantes étaient limitées. Un environnement de marché plus concurrentiel et transparent ainsi que de meilleures infrastructures pourraient réduire les coûts de transaction et les barrières à l'entrée dans le secteur, et fournir des opportunités aux exploitations constituées en société de plus petite taille d'être concurrentielles de manière plus efficace. Dieser Beitrag untersucht, weshalb es in der russischen Oblast Moskau hauptsächlich große Corporate Farms gibt, und kommt zu dem Schluss, dass dafür wahrscheinlich hohe externe Transaktionskosten ausschlaggebend sind. Über den neunjährigen Untersuchungszeitraum waren größere Betriebe erfolgreicher. Steigende Skalenerträge waren jedoch bei der Begründung für den höheren Erfolg der größeren Betriebe nicht maßgeblich. Es wird angenommen, dass hohe externe Transaktionskosten aufgrund von fehlender Transparenz auf dem Milchmarkt , typisch für unterentwickelte Märkte , den größeren Betrieben einen Wettbewerbsvorteil verschaffen. Ihre Suchkosten pro Produkteinheit sind relativ gering, daher sind sie in der Lage, höhere Preise für Milch ab Hof zu erzielen. Die Ergebnisse bestätigen die Abhängigkeit des Preises für Milch ab Hof von der Betriebsgröße, weil es auf dem Markt für Milch (dem wichtigsten Produkt der untersuchten Betriebe) hohe Transaktionskosten gibt. Den erfolgreichen Betrieben gelang es, über den Untersuchungszeitraum zu wachsen, während die leistungsschwächeren Betriebe nur eingeschränkt wachstumsfähig waren. Ein wettbewerbsfähigeres und transparenteres Marktumfeld in Kombination mit einer besseren Infrastruktur könnte die Transaktionskosten und Marktzugangsbeschränkungen senken sowie kleineren Corporate Farms Möglichkeiten eröffnen, um effektiver am Wettbewerb teilzunehmen. [source] Increasing returns to scale from variable capacity utilizationINTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 3 2007Susheng Wang E32; D24 We propose a unique model in which the firm varies capacity utilization by a variable number of shifts when facing demand fluctuations. In the long run, the firm optimally chooses a capacity level based on expected demand conditions. In the short run, when facing excess demand, the firm can increase variable inputs and the number of shifts to intensify the use of existing capacity. By endogenizing cost, demand and variability of capacity utilization, we show that variable capacity utilization can lead to increasing returns to scale. Hence, we predict increasing returns to scale when an economy expands in a business cycle. [source] Elements Which Delimitate Technical Efficiency of Fish Farms in GhanaJOURNAL OF THE WORLD AQUACULTURE SOCIETY, Issue 4 2010Edward E. Onumah The study aims to examine the technical efficiency and its determinants of fish farms in Ghana. The stochastic frontier function is employed using a cross-sectional data of 150 farmers. The results show that elasticities of mean output for all inputs are positive, whereas the computed return to scale reveals that, on average, fish farms exhibit increasing return to scale. The combined effect of operational and farm-specific factors influence technical efficiency although individual effects of some variables may not be significant. Mean technical efficiency is estimated to be 84%, indicating that the possibility of enhancing production given the present state of technology and input level can be achieved in the short run by increasing technical efficiency by 16% through adoption of practices of the best fish farm. [source] Agglomeration Economies, Division of Labour and the Urban Land-rent Escalation: A General Equilibrium Analysis of UrbanisationAUSTRALIAN ECONOMIC PAPERS, Issue 2 2002Guang-Zhen Sun A general equilibrium model with increasing return to labour specialisation and economies of transaction agglomeration is developed to address the residential land-rent escalation associated with the urbanisation process, which is in turn endogenised as a result of the evolution of the division of labour. The interplay among the geographical pattern of transactions, trading efficiency and the network size of the division of labour plays a crucial role in our story of urbanisation. We show that: as transaction conditions are improved, the equilibrium level of division of labour and individuals specialisation levels increase; the urban land-rent increases absolutely as well as relative to that in the rural area, the relative per capita lot size of residence in the urban and rural areas decreases; the diversity of occupations in the urban area and the population share of urban residents increase; and the productivity of all goods and per capital real income increase. [source] On the Pervasiveness of Home Market EffectsECONOMICA, Issue 275 2002Keith Head Paul Krugman's model of trade predicts that the country with the relatively large number of consumers is the net exporter and hosts a disproportionate share of firms in the increasing returns sector. He terms these results ,home market effects'. This paper analyses three additional models featuring increasing returns, firm mobility, and trade costs to assess the robustness of home market effects to alternative modelling assumptions. We find strikingly similar results for two of the models that relax assumptions about the nature of demand, competition and trade costs. However, a model that links varieties to nations rather than firms can generate opposite results. [source] On the Effects of Wage Pressure on the Unemployment Rate and Capital ShareGERMAN ECONOMIC REVIEW, Issue 4 2006Takashi Ohno Wage pressure; increasing returns to scale; unemployment; capital share Abstract. The purpose of this paper is to understand the behaviour of the capital share and the unemployment rate in Europe over the past quarter of a century. We consider a model with monopolistic competition, increasing returns and an imperfect labour market, assuming that the elasticity between capital and labour is less than unity. Previous works have generally assumed constant returns to scale. Our results offer an important conclusion, namely that increased wage pressure will increase the unemployment rate and the capital share even though the latter initially decreases, which fits the stylized facts about the studied economies. [source] Increasing returns to scale from variable capacity utilizationINTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 3 2007Susheng Wang E32; D24 We propose a unique model in which the firm varies capacity utilization by a variable number of shifts when facing demand fluctuations. In the long run, the firm optimally chooses a capacity level based on expected demand conditions. In the short run, when facing excess demand, the firm can increase variable inputs and the number of shifts to intensify the use of existing capacity. By endogenizing cost, demand and variability of capacity utilization, we show that variable capacity utilization can lead to increasing returns to scale. Hence, we predict increasing returns to scale when an economy expands in a business cycle. [source] Geographic Concentration and Increasing ReturnsJOURNAL OF ECONOMIC SURVEYS, Issue 5 2003Paolo Surico Abstract., Economic activities are highly clustered. Why is geographic concentration becoming a predominant feature of industrialized economies? On the basis of the empirical models developed by the new theories of international trade, our answer is that increasing returns are the driving force of economic geography in the US as well as in Europe. In so doing, we review several econometric methods proposed in the literature to separate and to test alternative theoretical paradigms. [source] Efficiency in an Economy with Fixed CostsJOURNAL OF PUBLIC ECONOMIC THEORY, Issue 2 2001Andrea Dall'olio It is by now well known that in an economy with increasing returns, first-best efficiency may be impossible to attain through an equilibrium concept based on market prices, even if firms are regulated to follow marginal cost pricing. We examine the efficiency issue in a special but important class of economies in which the only source of nonconvexities is the presence of fixed costs. Even in this context, it is possible that none of the equilibria based on marginal cost pricing are efficient (unless additional, strong assumptions are made). We argue that available results on the existence of an efficient two-part tariff equilibrium rely on very strong assumptions, and we provide a positive result using a weak surplus condition. Our approach can also be used to establish the existence of an efficient marginal cost pricing equilibrium with endogenously chosen lump-sum taxes if the initial endowment is efficient in the economy without the production technology. [source] RETURNS TO SCALE AND REGIONAL GROWTH: THE STATIC-DYNAMIC VERDOORN LAW PARADOX REVISITED,JOURNAL OF REGIONAL SCIENCE, Issue 2 2007John S. L. McCombie ABSTRACT It has long been an article of faith amongst regional economists that increasing returns to scale are necessary to explain the punctiform location of economic activity and population. However, there is no consensus in the empirical literature over whether returns to scale are constant or increasing. A notable example of this lack of agreement is provided by the static-dynamic Verdoorn law paradox. While the dynamic Verdoorn law (specified using growth rates) yields estimates of substantial increasing returns to scale, the static Verdoorn law (specified using log-levels) indicates only the presence of constant returns to scale. In this paper, we explain the static-dynamic Verdoorn law paradox by showing that estimates of returns to scale obtained using the static law are subject to a spatial aggregation bias, which biases the estimates towards constant returns to scale. We illustrate our arguments by means of simulation exercises. The results obtained hold general lessons for applied economic analysis using spatial data. [source] The Geographic Effects of Trade Liberalization with Increasing Returns in TransportationJOURNAL OF REGIONAL SCIENCE, Issue 2 2003Kashif S. Mansori The distinctive features of the model are that transportation is costly between locations within a nation as well as between nations, and that these transportation costs are subject to increasing returns to scale. A result of the model is that trade liberalization may cause the population of a country to become more concentrated in a single megalopolis. The large megalopolis may reduce welfare due to congestion costs, which implies that liberalization may unexpectedly leave the country worse off. [source] Modeling Agglomeration and Dispersion in City and Country: Gunnar Myrdal, François Perroux, and the New Economic GeographyAMERICAN JOURNAL OF ECONOMICS AND SOCIOLOGY, Issue 1 2001Stephen J. MeardonArticle first published online: 28 JUN 200 The "new economic geography" is a recent body of literature that seeks to explain how resources and production come to be concentrated spatially for reasons other than the standard "geographic" ones. Unlike alternative explanations of the geographic distribution of industry, the literature is not interdisciplinary. The new economic geography lies well within economics proper: it is an offspring of international trade theory, with models characterized by increasing returns, factor mobility, and transportation costs. The models explain the distribution of industry in terms of the opposition of an agglomerating force, the interaction of transportation costs and increasing returns to scale, with a dispersing force, commonly the interaction of transportation costs and a partially fixed input or output market. Some authors outside the new economic geography (e.g., Martin 1999) have criticized it as simplistic, irrelevant, or passé. They claim it employs overly abstract analysis, prioritizes mathematical technique over realistic explanation, and is reminiscent of the much earlier works of Gunnar Myrdal and François Perroux,in comparison to which, however, it falls short. This paper investigates the similarities and differences between the new economic geography and the work of Myrdal and Perroux, who in the previous special issue of this journal were ranked by Zafirovsky (1999, pp. 596, 598) as among the leading twentieth century economic sociologists. I examine how the techniques of analysis and intuitive explanations of agglomeration compare between these economic sociologists and the new economic geographers. The paper highlights what has been gained and what has been lost by the new economic geographers, who generally eschew interdisciplinary study. [source] THE DIVISION OF LABOR AND ROUNDABOUT PRODUCTION: ALLYN YOUNG REVISITEDPACIFIC ECONOMIC REVIEW, Issue 3 2003Guang-Zhen Sun First, apart from advancing the state of knowledge, the progressive division of labor that can occur within a given population encourages the adoption of more specialized, differentiated intermediate goods in the production process. Second, the level of division of labor and the extent of the market depend on each other. Using a general equilibrium model with increasing returns to specialization, economies of complementarity between intermediate goods, and transaction costs, we demonstrate that the level of division of labor and the number of intermediate goods increase concurrently as transaction conditions are improved. [source] Path Dependency and the Reform of English Local GovernmentPUBLIC ADMINISTRATION, Issue 1 2005Francesca Gains This paper uses the concept of path dependency to examine the changes to the political management structures of English local government. We note how the possible experience of decreasing returns among some local authority actors combined with the powerful intervention of politicians within New Labour at the national level led to a significant break from past policy and the imposition of measures to establish a separate executive that was claimed as a radical step forward for local democracy. Using survey data from the Evaluating Local Governance research team (http://www.elgnce.org.uk), we explore the establishment of a separate political executive in all major local authorities and map out the style of decision-making that is emerging. We find that some established institutional patterns reasserted themselves in the process of implementation, but that increasing returns are not as great as some theorists of path dependency would suggest and they may be a force for system change as well as for stability. [source] Optimal environmental and industrial policies and imperfect agglomeration effectsREGIONAL SCIENCE POLICY AND PRACTICE, Issue 2 2009Daisuke Ikazaki Agglomeration; technology; environment Abstract This paper examines a simple general equilibrium model that considers problems related to agglomeration, technology, and the environment. First, it is shown that the manufactured goods sector converts from classical technology with constant returns to scale to modern technology with increasing returns to scale as the regional population increases. The optimal pollution level might be an inverted-U shape with respect to population if optimal environmental policy is adopted. Second, the optimal population level of conversion is not attained in the market economy. The labour that is devoted to the manufactured goods sector in the market economy is too small. So, we derive the optimal subsidy rates to the manufactured goods sector to make resource allocation optimum. Third, we consider migration using the two-region model. One region becomes a large city and the other region becomes a rural area if the total population is large. The industrial policy tends to extend the population difference between city and rural areas. On the other hand, if the total population is small, a symmetric point will be stable equilibrium. [source] Foreign Direct Investment, Infrastructure and the Welfare Effects of Labour MigrationTHE MANCHESTER SCHOOL, Issue 3 2002Frank Barry A model of a small open economy with open capital and labour markets is presented. Labour demand is based on capital mobility and increasing returns in production. Migration decisions are based on the relative attractiveness of regions in terms of the stock of infrastructure, including its tax cost and the degree of congestion, and the level of wages prevailing. Equilibria are not Pareto efficient because individuals do not take account of the impact of their actions on the level of wages prevailing, the extent of the tax base to finance infrastructural provision, or the degree of congestion. The model generates new insights into a range of policy issues that surfaced over the course of the recent Irish boom. [source] Avoiding market dominance: product compatibility in markets with network effectsTHE RAND JOURNAL OF ECONOMICS, Issue 3 2009Jiawei Chen As is well recognized, market dominance is a typical outcome in markets with network effects. A firm with a larger installed base offers a more attractive product which induces more consumers to buy its product which produces a yet bigger installed base advantage. Such a setting is investigated here but with the main difference that firms have the option of making their products compatible. When firms have similar installed bases, they make their products compatible in order to expand the market. Nevertheless, random forces could result in one firm having a bigger installed base, in which case the larger firm may make its product incompatible. We find that strategic pricing tends to prevent the installed base differential from expanding to the point that incompatibility occurs. This pricing dynamic is able to neutralize increasing returns and avoid the emergence of market dominance. [source] Organization, Management and Delegation in the French Water IndustryANNALS OF PUBLIC AND COOPERATIVE ECONOMICS, Issue 4 2001Jihad C. Elnaboulsi The water industry is largely a natural monopoly. Water distribution and sewerage services are characterized by networks and its natural monopoly derives from the established local networks of drinking water and sewers: they are capital intensive with sunk costs and increasing returns to scale. In France, local communities have a local requirement of providing public services under optimum conditions in terms of techniques and cost-effectiveness, and subject to respect different kind of standards in terms of water quality and level of services. They are responsible for producing and distributing drinking water, and collecting and treating wastewater. Furthermore, the French water utilities are required to be financially self-sufficient. Rate-setting varies across regions and local territories due to a variety of organizational features of services and availability of water resources. The management of these local public services can be public or private: local governments have the right, by the constitution, to delegate water service management to private companies which operate under the oversight of local municipal authorities. Today, nearly 80 per cent of the French population receive private distributed water. Different reasons are responsible for the poor performance and low productivity of most French public water utilities: technical and operational, commercial and financial, human and institutional, and environmental. Thus, many water public utilities have looked for alternative ways to provide water and sanitation services more efficiently, to improve both operational and investment efficiency, and to attract private finance. The purpose of this paper is to present the French organizational system of providing drinking water services, and collecting and treating wastewater services: legal aspects, contracts of delegation, and competition. [source] A factor endowment theory of international trade under imperfect competition and increasing returnsCANADIAN JOURNAL OF ECONOMICS, Issue 1 2005Kenji Fujiwara JEL classification: F10, F12 Une théorie du commerce international fondée sur la dotation de facteurs de production en régime de concurrence imparfaite et de rendements croissants., A partir d'un modèle à deux biens (un bien concurrentiel et un bien imparfaitement concurrentiel) où il y a deux facteurs de production primaires (capital et travail), deux pays impliqués dans le commerce international, et où le secteur imparfaitement concurrentiel a des rendements croissants à l'échelle, on produit une version oligopolistique du théorème de Heckscher-Ohlin. [source] | |||||||||||||||||||||||||