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This thesis uses an international economic framework to analyze the strategic role that R&D cooperation can play in international competitions. There are two firms located in different countries and competing in output. Each firm can invest in cost-reducing R&D. There are R&D spillovers, meaning that a portion of the research results of each firm leaks out to the other firm. Two basic setups are considered. In the first setup, one of the firms benefits from an R&D subsidy from its government. In the second setup, firms collaborate in R&D. Multi-stage game-theoretic models are adopted, and the equilibrium concept used is subgame perfectness1[36]. The two setups are compared in terms of innovation, profits, and welfare. Moreover, the impact of spillovers on firms' and the government's decisions are considered. It is found that the subsidy declines with spillovers, because spillovers reduce the benefit of the innovation to the domestic firm. The subsidy boosts R&D investment by the domestic firm, because it reduces the net cost of R&D. (Abstract shortened by UMI.) 1Subgame perfectness is a requirement that decisions be rational at every stage of the game.

This thesis contains three essays and a short introductory chapter. The main theme of the thesis is the interaction of international trade and labor standards, which has been at the forefront of recent trade negotiations, both at the regional and multilateral level. Even though the essays in this thesis share a common theme, they can be read independently without impeding the reader's understanding of the issues discussed in each. The first essay theoretically considers the impact of labor standards on comparative advantage through their effects on the terms of trade. I use a standard Heckscher-Ohlin trade model and analyze the effects of incorporating a standard that takes resources away from the tradeable sectors. I find that movement in the terms of trade due to the imposition of a standard depends on whether the standard withdraws resources from the import or the export sector, and also on the capital-labor ratios of the tradeable goods. These results imply that there exist grounds for countries to set higher than optimal levels of standards in order to obtain terms of trade gains. The second essay makes use of cross sectional data for a sample of more than seventy (developed and developing) countries to analyze the issue of trade and labor standards. It seeks to answer two questions, first, whether the imposition of labor standards affects the export performance of countries, and second, whether labor standards affect foreign direct investment (FDI) flows. The third essay, unlike the general approach in the literature which is based on cross-sectional analysis, uses a time series approach based on the structural change literature to analyze and compare the effects of different measures of labor standards on the behavior of exports for Canada and the United States. It also provides an analysis of the issue of convergence of labor standards between the two countries within the context of the North-American Free Trade Agreement. Overall, the empirical results from the second and third essays suggest that caution should be exercised before drawing broad conclusions regarding the magnitude and direction of the effects of labor standards on both export performance and FDI flows, which can have very different policy implications.

Chapter one: a theory of rational marriage and divorce . The decisions to marry and, possibly, to divorce are amongst the most important economic decisions that individuals make during their life. The partner you marry is of great significance for determining your material prosperity. However, not all marriages are durable. Given that divorce is both common and costly, there exists a puzzling question: why do individuals get marred when with high probability their marriage may not work out? Unlike much previous work in which household dissolution is explained by imperfect information, this paper develops a theory of household dynamics in a world of perfect information. Rather than relying on such considerations, the analysis in this thesis highlights the importance of public goods consideration in influencing individuals decision-making with respect to marriage and divorce. A two-period non-cooperative game is considered in which individuals allocate their labor between the outside labour market and household public good production. It is shown that individuals may rationally choose to marry even when they fully anticipate a subsequent decision to divorce. Married individuals benefit from economies of scale in household public good production, and may therefore choose to enter into a 'starter' marriage. However, if divorce is very costly, this may discourage individuals from forming a 'temporary' household. Chapter two: rational marriage and divorce with remarriage. This paper extends the first chapter by introducing the matching considerations as well as the possibility of remarriage. In contrast to Becker (1991), it is shown that if individuals differ only in their outside market opportunities then positive assortative matching is not always optimal and negative assortative matching is not always non-optimal when traits are complements. Strikingly, individuals may choose to wait in marriage before eventually divorcing in the hope of obtaining a 'better fit'. The importance of the asset division rules upon divorce are highlighted: appropriately chosen rules not only promote stable marriage but also discourage 'temporary' marriage. Chapter three: an empirical investigation of the impact of public goods and public policies on household dynamics. This paper is an empirical investigation into the determinants of marriage and divorce. It uses the Survey of Labour Income Dynamics (SLID) Panel data set to examine the role of public goads and public policy in household formation and dissolution. Three types of public goods are identified: assets (like home ownership), children, and companionship. We look at the role of home ownership in the decisions to marry and divorce, and find that ownership prior to marriage tends to reduce the probability of marriage while ownership after marriage tends to reduce the probability of divorce. The presence of children tends, by and large, to reduce the probability of divorce. Companionship is important to maintain stability within a marriage: we found that spouses who worked in different shifts are more likely to divorce relative to others, ceteris paribus. Overall, we find much support for the idea that public goods serve as an attraction for marriage; while their deterioration leads to divorce. On the policy front, we examine the impact of the 1997 Child Support Guidelines on marriage and divorce. While their effect on marriage is negligible, evidence suggests that divorce is now more likely as a result of the implementation of these guidelines.

This thesis looks at the Canadian Pulp and Paper Industry at both the empirical level and the theoretical level. In the first half of the thesis, the empirical aspects of the industry are studied within the framework of the trade-off between environmental protection and efficiency of the plants. In the second half, several theoretical issues related to the market structure of the pulp and paper industry are analyzed. Chapter 1 provides an overview of the Canadian Pulp and Paper Industry and the various production processes. In Chapter 2, an empirical analysis is undertaken to study the relation between technical efficiency and pollution. This analysis has far-reaching policy implications as it allows us to study empirically the effect of pollution control regulations on the performance of the firms. Chapter 3 contains a study on the international trade in market pulp, with specific focus on the trade among Canada, US, and Europe. A multi-market spatial oligopoly model is formulated, calibrated, then simulated to gain insights into the workings of these interdependent markets. In Chapter 4, an oligopoly model for the tissue and towel market in North America is formalized then calibrated. The objective of this chapter is to obtain an adequate picture of the consumer market, in which prices, qualities, and advertising are used to entice consumers. The model contains four firms, which produce a total number of ten brands among them. The simulation of the model yields detailed results on the intricate workings of the industry and results that cannot be expected from simple text-book oligopoly models.

This thesis contains three essays on the economics of corruption. The first essay presents a game-theoretic analysis of the Japanese defense market. The second essay presents a model---formulated from the mechanism design perspective---for analyzing the reemployment of high-ranking Japanese bureaucrats in the private sector. The third essay presents a bribery-bidding game with multiple corrupt bureaucrats and a private firm to analyze the corruption in entry regulation. The first essay presents a game that incorporates these features of the defense procurement process. The results of the analysis suggest that the government pay for low-quality defenses goods at inflated prices. Furthermore, because Japanese firms are shielded from competition and because of the lack of a large foreign market, the Japanese defense industry has no incentive to engage in R&D to improve the quality of its defense goods. The second essay analyzes the implicit collusive relationship between government and private petroleum companies from the perspective of mechanism design. The game contains an explicit formalization of the implicit collusion between government and the petroleum companies it regulates. It has the structure of an optimal-auction problem---with a retiring bureaucrat as the object of the auction, government as the seller, and private petroleum companies as the potential buyers. This essay provides a necessary and sufficient condition for the direct-revelation mechanism to be truthfully implementable in Bayesian Nash equilibrium, and the characterization of the optimal mechanism for government. In the third essay, we analyze the corruption in entry regulation that involves an entrepreneur and a track of bureaucrats. First, because of the asymmetry of information, the entrepreneur might not obtain the required permit, although collectively as a group, the joint net payoff of the entrepreneur and the bureaucrats is positive. Second, the entrepreneur might pay the bribes without getting the permit. Third, the model confirms the efficiency wage argument; that is, a higher wage discourages corruption by lowering the probability that bureaucrat will accept bribes for fear of losing their jobs if get caught. More rigorous law enforcement to increase the probability of detection also helps to reduce corruption. Keywords. Amakudari, Corruption, Bribery, Entry Regulation, Mechanism Design, Defense Procurement JEL Classification: D02, D44, D45, D73, D82