This thesis consists of three essays which explore different economic issues emerging in today's globalized world economy. Using a model of outsourcing by monopolistically competitive firms, the first essay shows that, even in the case of flexible domestic wages, international outsourcing (and/or re-location of plants to a low-wage economy) by home firms may worsen the welfare of the home country and reduce the profits of all firms in the industry, even though it is individually rational for each firm to choose to outsource. It shows that if a social planner for the home country can choose the extent of international outsourcing, his optimal choice will not coincide with the equilibrium outcome under laissez-faire. A wage subsidy may improve welfare. When the wage in the home country is rigid we show that outsourcing is welfare-improving for the home country if and only if the sum of the "trade creation" effect and the "exploitation effect" exceeds the "trade diversion" effect of the access to the low-wage labour in the foreign country. The essay also assesses the model in a two-period framework, where each domestic firm faces the choice between outsourcing (or re-location) in the first period, or in the second period. Delaying outsourcing can be gainful because the fixed cost of outsourcing may fall over time. On the other hand, delaying means the firm's variable production cost in period 1 will be higher than that of rivals who are outsourcing. The equilibrium of this two-period game may involve some firms outsourcing in period 1, while others will outsource in period 2, even though ex-ante they are identical firms. Under monopolistic competition, in equilibrium, the sum of discounted profits is identical for all firms. Again, a social planner for the home country may choose a different speed of outsourcing than the speed achieved by an industry under laissez-faire. / The second essay explores the market for fair-trade products. It employs a duopoly model involving a firm producing a fair-trade product in competition against a conventional firm producing a standard product. The concept of "economic identity" (Akerlof and Kranton, 2000) is used to model consumers' demand for fair-trade products. The essay shows how, in the short run, the parameters of the identity function can impact the equilibrium prices, and in the medium run, how they impact the conventional firm's choice of its position in the product space. In the long run, however, the fair-trade firm may be able to influence the parameters of the identity function, for its own advantage. / The last essay uses the contest model (Tullock, 1980, Rowley et al., 1988, Hillman and Riley, 1989, Nitzan, 1994) to assess welfare effects of bilateral liberalization of government procurement. It shows that there exists a single condition that ensures active participations of all firms in all contests. When this condition is violated, i.e. under a dominant-country case, the dominating country always gains from trade liberalization, while welfare of the dominated country improves only if its corporate tax is sufficiently high. Under full participation of all firms, i.e. no country dominates the markets, and countries are partially symmetric, there exist conditions where bilateral liberalization is mutually beneficial to both countries. When countries are completely asymmetric, it is showed that a country may gain from bilateral trade liberalization if its tax rate is sufficiently high, while the tax rate of the other country is sufficiently low. The results obtained in this essay have shed lights on the current position of negotiations on liberalizing government procurement within the WTO. They suggest plurilateral agreements on government procurement could be formed among countries with similar economic conditions. Such agreements, however, are hard to reach between countries with a large degree of economic asymmetry.
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:QMM.111903 |
| Date | January 2009 |
| Creators | Do, Viet Dung, 1975- |
| Publisher | McGill University |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Format | application/pdf |
| Coverage | Doctor of Philosophy (Department of Economics.) |
| Rights | All items in eScholarship@McGill are protected by copyright with all rights reserved unless otherwise indicated. |
| Relation | alephsysno: 003133713, proquestno: AAINR66624, Theses scanned by UMI/ProQuest. |
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