UNIVERSITY OF COLORADO BOULDER, COLORADO. Course Outline and Reading List

Transcription

1 UNIVERSITY OF COLORADO BOULDER, COLORADO Economics 6413 International Trade James R. Markusen Phone: Office: 216 Office Hours: Tuesday, Thursday 9:30-11:30 August 28, 2000 Course Outline and Reading List The Course Outline given below lists the major topics we will deal with in this course. Attached to each topic is a list of the major references. You will be expected to know the text (MMKM) very well, but you will not be expected to read many journal articles. The supplemental textbook is BHV. In addition, you are assigned "The Lexus and the Olive Tree" by Thomas Friedman. Other references are a resource for you for future study and work. Assessment in the course will consist of two problem sets (15% each) a mid-term (20%) and a final exam (30%). In addition, you will be asked to write a critical essay relating Friedman's book to economic theory (20%). I will give more details about this in class. MAJOR REFERENCES Markusen, Melvin, Kaempfer, and Maskus, International Trade: Theory and Applications, McGraw Hill, Bowen, Hollander, and Viaene, Applied International Trade Analysis, Michigan. Friedman, Michael, The Lexus and the Olive Tree. APPLIED BOOKS Dixit and Norman, Theory of International Trade, Cambridge. Bhagwati (ed.), International Trade: Selected Readings, MIT Press, second edition. Grossman (ed.), Imperfect Competition and International Trade, MIT Press. Grossman and Helpman, Innovation and Growth in the Global Economy, MIT Press. Jones and Kenen, Handbook of International Economics, Volume I, North-Holland. Helpman and Krugman, Market Structure and Foreign Trade, MIT Press. Helpman and Krugman, Trade Policy and Market Structure, MIT Press. Woodland, International Trade and Resource Allocation, North-Holland.

2 Kierzkowski (ed.), Monopolistic Competition and International Trade, Oxford. Kemp, The Pure Theory of International Trade, Prentice Hall. Feenstra (editor), Empirical Methods for International Trade, MIT Press. Chacholiades, International Trade Theory and Policy, McGraw Hill. Chipman, "A Survey of the Theory of International Trade", Econometrica (Part I, July 1965, Part II, October 1965, Part III, February 1966). Meade, A Geometry of International Trade, George Allen and Unwin. Bhagwati and Srinivasan, Lectures on International Trade, MIT Press. PART I: TECHNICAL CONCEPTS 1. The Production Frontier MMKM, Chapter 2 3. Demand MMKM, Chapter 3 5. Equilibrium in the Closed versus Open Economy MMKM, Chapter 4 6. Offer Curves, Stability of Trading Equilibria MMKM, appendix PART II: THE GAINS FROM TRADE 1. Sources of Gains from Trade, Comparative and Absolute Advantage MMKM, Chapter 5. Corden, "The Normative Theory oflnternational Trade", in Jones and Kenen. Kemp, Chapter 11, Sections The Gains from Trade Theorem MMKM, Chapter 5. Corden, "The Normative Theory oflnternational Trade", in Jones and Kenen.

3 Kemp, Chapter 11, Sections 7, Failure of the GFT Theorem: Non-Tangencies, Non-Convexities MMKM, Chapter 5. Markusen and Melvin, "The Gains From Trade Theorem with Increasing Returns to Scale", in Kierzkowski, Chapter 2. Corden, "The Nonnative Theory oflnternational Trade", in Jones and Kenen. 4. The Distribution of Gains Among Individuals MMKM, Chapter 5. PART III: BASES FOR TRADE 1. Technology and the Ricardian Trade Model MMKM, Chapters 6, 7. BHV, Chapter 3 Jones and Neary, "The Positive Theory oflnternational Trade", in Jones and Kenen. Markusen and Svensson, "Trade in Goods and Factors with International Differences in Production Technology", International Economic Review, 1985, pp Factor Endowments MMKM, Chapters 8, 9. BHV, Chapter 4 Jones and Neary, "The Positive Theory oflntemational Trade", in Jones and Kenen. Kemp, Chapter 1. Dixit and Norman, Chapter 4. Woodland, Chapters 4, 7. Jones, "The Structure of Simple General-Equilibrium Models," Journal of Political Economy, Jones, "A Three Factor Model in Trade, Theory and History", in Bhagwati et. al. (editors), Trade, Balance of Payments and Growth, North Holland, Neary, "Short-Run Capital Specificity and the Pure Theory of International Trade", Economic Journal, 1978, pp Mayer, "Short-Run and Long-Run Equilibrium for a Small Open Economy," Journal of Political Economy, 1974, Mussa, "Tariffs and the Distribution oflncome: the Importance of Factor Substitutability, and Intensity in the Short and Long Run", Journal of Political Economy, 1974, pp Ethier, "Higher Dimensional Trade Theory," in Jones and Kenen. Samuelson, "International Trade and the Equalization of Factor Prices", Economic Journal, June Samuelson, "International Factor Price Equalization Once Again," Economic Journal, June Stolper and Samuelson, "Protection and Real Wages," Review of Economic Studies,

4 1941, Rybczynski, "Factor Proportions and the Heckscher-Ohlin Theorem", Economica, 1955, Ohlin, International and Interregional Trade, Harvard. 3. Commodity Market Distortions MMKM, Chapter 10 Melvin, "Commodity Taxation as a Determinant of Trade," Canadian Journal of Economics, February Imperfect Competition MMKM, Chapter 11 BHV, Chapter 9 Markusen, "Trade and the Gains from Trade with Imperfect Competition," Journal of International Economics, 1981, Brander and Krugman, "A Reciprocal Dumping Model oflntemational Trade", in Grossman, Grossman, Reading, All. 5. Increasing Returns to Scale MMKM, Chapter 12. Helpman and Krugman, All Krugman, "Increasing Returns, Monopolistic Competition and International Trade," Journal of International Economics, 1979, In Bhagwati, Krugman, "Scale Economies, Product Differentiation, and the Pattern of Trade", American Economic Review 1980, In Grossman, Helpman, "International Trade in the Presence of Product Differentiation, Economies of Scale and Monopolistic Competition: A Chamberlinian-Heckscher-Ohlin Approach," Journal of International Economics, 1981, In Grossman, Lancaster, "Intra-Industry Trade under Perfect Monopolistic Competition," Journal of International Economics, 1908, Markusen and Melvin, "Trade, Factor Prices and The Gains from Trade with Increasing Returns to Scale", Canadian Journal of Economics, 1981, Ethier, "Internationally Decreasing Costs and International Trade", Journal of International Economics, 1979, Ethier, "National and International Returns to Scale in the Modem Theory of International Trade", American Economic Review, 1982, In Grossman, Kemp, Chapter 8. Melvin, "Increasing Returns as a Determinant of Trade", Canadian Journal of Economics, 1969, pp Jones, "Variable Returns to Scale in General Equilibrium Theory," International Economic Review, 1968, Herberg and Kemp, "Some Implications of Variable Returns to Scale," Canadian Journal of Economics, August 1969.

5 Harris, "Applied General Equilibriwn Analysis of Small Open Economies with Scale Economies and Imperfect Competition," American Economic Review, 1984, Markusen, "Trade in Producer Services and in other Specialized Intermediate Inputs", American Economic Review 1989, Factor Market Distortions MMKM, Chapter 10. Jones and Neary, "The Positive Theory of International Trade", in Jones and Kenen. Bhagwati and Srinivasan, Chapters 20.:22. Johnson, "Factor Market Distortions and the Shape of the Transformation Curve," Econometrica, 1966, Magee, "Factor Market Distortions, Production, Distribution, and the Pure Theory of International Trade," Quarterly Journal of Economics, 1971, Neary, "Dynamic Stability and the Theory of Factor Market Distortions", American Economic Review, 1978, Herberg and Kemp, "Factor Market Distortions, the Shape of the Locus of Competitive Outputs, and the Relation Between Product Prices and Equilibriwn Outputs," in Bhagwati et. al., Trade, Balance of Payments and Growth, North Holland, Johnson, "Minimwn Wage Laws: A General Equilibriwn Analysis," Canadian Journal of Economics, November Brecher, "Optimal Commercial Policy for a Minimum-Wage Economy", Journal of International Economics, 197 4, Markusen and Robson, "Simple General Equilibrium and Trade with a Monopsonized Sector." Canadian Journal of Economics, November Feenstra, "Monopsony Distortions in an Open Economy: A Theoretical Analysis," Journal of International Economics, 1980, Johnson and Mieszkowski, "The Effects of Unionization on the Distribution of Income: A General Equilibrium Approach," Quarterly Journal of Economics, November Melvin, "Short-Run Price Effects of the Corporate Income Tax and Implications for International Trade," American Economic Review, December Demand, the Product Cycle MMKM, Chapter 13. Linder, An Essay on Trade and Transformation, Almqvist and Wiksell, Vernon, "International Investment and International Trade in the Product Cycle," Quarterly Journal of Economics, May Vernon (ed.), The Technology Factor in International Trade, Columbia University Press, Markusen, "Explaining the Volwne of Trade: An Eclectic Approach", American Economic Review, December Hunter and Markusen, "Per-Capita Income as a Determinant of Trade", in Feenstra (editor), Empirical Methods for International Trade, MIT Press, 1987 forthcoming. Grossman and Helpman, "Product Development and International Trade", in Grossman,

6 Grossman, "A Model of Quality Competition and Dynamic Comparative Advantage", In Grossman, 8. Empirical Test of Trade Theories MMK.M, Chapter 14. BHV, Chapter 8

7 PART IV: THE THEORY OF PROTECTION 1. Tariffs MMKM Chapter 15. BHV, Chapter 5 Corden, "The Nonnative Theory", in Jones and Kenen, Chapter 2. Dixit and Norman, Chapters 4, 5. Woodland, Chapters 10, 11. Bhagwati and Srinivasan, Chapter 9. Johnson, "Tariffs and Retaliation", Review of Economic Studies, 1953, Markusen, "The Distribution of Gains from Bilateral Tariff Reduction", Journal of International Economics, 1981, Effective Protection 3. Quotas MMKM, Chapter 15. Woodland, Chapter 10. Bhagwati and Srinivasan, Chapter 11. Corden, "The Structure of a Tariff System and the Effective Protection Rate," Journal of Political Economy, 1966, Grubel, "Effective Tariff Protection: A non-specialist's Introduction to the Theory, Policy Implications, and Controversies," in Baldwin and Richardson (editors), International Trade and Finance, first edition, Little Brown. Jones, "Effective Protection and Substitution," Journal of International Economics, Corden, "The Normative Theory", in Jones and Kenen, Chapter 2. MMKM, Chapter 16. BHV, Chapter 5 Corden, "The Normative Theory", in Jones and Kenen, Chapter 2. Woodland, Chapter 11. Bhagwati and Srinivasan, Chapter 10. Bhagwati, "More on the Equivalence of Tariffs and Quotas", American Economic Review, 1986, Fishelson and Flatters, "The (Non) Equivalence of Tariffs and Quotas Under Uncertainty," Journal of International Economics, 1975, Rodriguez, "The Non-Equivalence of Tariffs and Quotas Under Retaliation," Journal of International Economics, 1974, In Bhagwati, 4. Strategic Trade Policy MMKM, Chapter 17. BHV, Chapter 10. Dixit, "International Trade Policy for Oligopolistic Industries," Economic Journal Supplement, 1984, Eaton and Grossman, "Optimal Trade and Industrial Policy under Oligopoly",

8 Quarterly Journal of Economics, 1985, In Grossman, Harris, "Why Voluntary Export Restraints are Voluntary", Canadian Journal of Economics, 1985, Horstmann and Markusen, "Up the Average Cost Curve: Inefficient Entry and the New Protectionism", Journal of International Economics, 1986, Krugman, "Import Protection as Export Promotion", in Kierzkowski (editor). In Grossman, Spencer and Brander, "International R&D Rivalry and Industrial Strategy," Review of Economic Studies, 1983, Venables, "Trade and Trade Policy with Imperfect Competition: The Case of identical Products and Free Entry," Journal of International Economics, 1985, Markusen and Venables, "Trade Policy with Increasing Returns and Imperfect Competition: Contradictory Results from Competing Assumptions", Journal of International Economics 24, 1988, In Grossman, Dixit and Grossman, "Targeted Export Promotion with Several Oligopolistic Industries", Journal of International Economics, 1986, Dixit, "Optimal Trade and Industrial Policies for the US Automobile Industry", in Grossman, Readings and Feenstra (ed). Baldwin and Krugman, "Market Access and International Competition: A Simulation Study of 16K Random Access Memories, In Grossman Readings, Feenstra (ed). 5. Political Economy of Trade Policy MMKM, Chapter 18. Krueger, "The Political Economy of the Rent-Seeking Society", in Bhagwati Bhagwati, Brecher, and Srinivasan "DUP Activities and Economic Theory", in Bhagwati Brock and Magee, "The Economics Special Interest Politics: The Case of the Tariff', American Economic Review, 1978, Bohara and Kaempfer, "A Test of Tariff Endogeneity in the United States", American Economic Review, 1991, Hillman, The Political Economy of Protection, Harwood Academic Publishers. 6. New Protectionism MMKM, Chapter 19.

9 PART V: THE THEORY OF PREFERENTIAL TRADING 1. Preferential Trade and Economic Integration MMKM, Chapter 21. BMV, Chapter 12. Corden, "The Normative Theory", in Jones and Kenen, Chapter 2. Kemp and Wan, "An Elementary Proposition Concerning the Formation of Customs Unions," in Kemp, Three Topics in the Theory of International Trade, North Holland, Bhagwati and Srinivasan, Chapter 27. Ethier and Hom, "Aspects of Economic Integration, in Kierzkowski (editor). Harris, Trade, Industrial Policy and Canadian Manufacturing, University of Toronto Press, PART VI: WELFARE AND COMMERCIAL POLICY IN THE PRESENCE OF EXTERNALITIES, TAXES, AND NON-TARIFF DISTORTIONS 1. Distortions and the Theory of the Second Best Bhagwati and Srinivasan, Chapters 23, 24, 30 and 32. Corden, "The Normative Theory", in Jones and Kenen, Chapter 2. MMKM, Chapter 23. Bhagwati, "The Generalized Theory of Distortions and Welfare," in Bhagwati et. al. Trade, the Balance of Payments and Growth, North Holland, In Bhagwati Johnson, "Optimal Trade Interventions in the Presence of Domestic Distortions," in Caves et. al. Trade, Growth, and the Balance of Payments, Rand McNally, In Bhagwati Brecher, "Optimal Commercial Policy for a Minimwn Wage Economy," Journal of International Economics, 1974, Bhagwati and Srinivasan, "Optimal Trade Policy and Compensation Under Endogenous Uncertainty: The Phenomenon of Market Disruption," Journal of International Economics, 1976, Sheikh, "Smuggling, Production, and Welfare," Journal of International Economics, 1976, Bhagwati and Srinivasan, "Shadow Prices for Project Selection in the Presence of Distortions," Journal of Political Economy, Bhagwati, "Immiserizing Growth: A Geometrical Note", Review of Economic Studies, 1956.

10 2. International Externalities Connolly, "Public Goods, Externalities, and International Relations," Journal of Political Economy, 1970, Markusen, "International Externalities and Optimal Tax Structures," Journal of International Economics, 1975, Markusen, "Cooperative Control of International Pollution and Common Property Resources," Quarterly Journal of Economics, 1975, PART VII: FACTOR MOVEMENTS 1. Factor Mobility in Factor-Proportions Models MMKM, Chapter 21. Jones and Neary, "The Positive Theory of International Trade", in Jones and Kenen Bhagwati and Srinivasan, Chapters 28, 29. Mundell, "International Trade and Factor Mobility," American Economic Review 1957, In Bhagwati Brecher and Dias Alejandro, "Tariffs, Foreign Capital, and Immiserizing Growth," Journal of International Economics, 1977, In Bhagwati Jones, "International Capital Movements and the Theory of Tariffs," Quarterly Journal of Economics, 1967, Svensson, "Factor Trade and Goods Trade", Journal of International Economics, Jones, Coelho, and Easton, "The Theorems of International Trade with Factor Mobility," Journal of International Economics, 1986, Ethier and Svensson, "The Theorems of International Trade with Factor Mobility, Journal of International Economics, 1986, Markusen and Melvin, "Tariffs, Capital Mobility and Foreign Ownership," Journal of International Economics, 1979, Brecher and Bhagwati, "Foreign Ownership and the Theory of Trade and Welfare," Journal of Political Economy, 1981, Bhagwati and Brecher, "National Welfare in the Open Economy in the Presence of Foreign Owned Factors of Production," Journal of International Economics, 1980, Factor Movements in Non-Factor Proportions Models MMKM, Chapter 21. Markusen, "Factor Movements and Commodity Trade as Complements," Journal of International Economics, 1983, Wong, "Are International Trade and Factor Mobility Substitutes," Journal of International Economics, 1986, In Bhagwati Markusen and Svensson, "Trade in Goods and Factors with International Differences in Technology," International Economic Review, 1985, PART VIII: THE THEORY OF DIRECT FOREIGN INVESTMENT

11 ( MMKM, Chapter 21. BHV, Chapter 11 Helpman and Krugman, Chapters 12, 13. Ethier, "The Multinational Firm," Quarterly Journal of Economics, 1987, In Grossman Markusen, "The Multinationals, Multi-Plant Economies, and the Gains from Trade", Journal of International Economics_, 1984, In Bhagwati Horstmann and Markusen," Strategic Investments and the Development of Multinationals", International Economic Review, Horstmann and Markusen, "Licensing versus Direct Investment: A Model of Internalization by the Multinational Enterprise," Canadian Journal of Economics, Horstmann and Markusen, "Endogenous Market Structures in International Trade", Journal of International Economics 1992, Helpman, "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, 1984, Casson, The Firm and the Market: Studies on Transaction Costs and the Strategy of the Firm, MIT Press, Caves, Multinational Enterprise and Economic Analysis, Cambridge, Dunning, International Production and the Multinational Enterprise, George Allen and Unwin, PART IX: GROWTH AND DYNAMIC ADJUSTMENT MMKM, Chapter 23. BHV, Chapter 14 Grossman and Helpman, all. Woodland, Chapters Bhagwati and Srinivasan, Chapters 25, 31. Findlay, in Jones and Kenen. Smith, in Jones and Kenen.