This paper investigates which of the two types of countries-resourcerich or resource-poor-gains from capital market integration and capital tax competition. We develop a framework involving vertical linkages through resource-based inputs as well as international fiscal linkages between the two types of countries. Our analysis shows that capital market integration causes capital flows from resource-poor to resourcerich countries and improves global production efficiency. However, such gains accrue only to resource-poor countries, and capital mobility might even negatively affect resource-rich countries. Furthermore, we show that resource-rich countries can exploit the gains when taxes on capital are available.

This paper proposes a framework, based on a reciprocal dumping model, that assesses the effects of tariff competition for mobile firms on the location patterns of the industry as well as welfare implications. While high transport costs encourage geographic dispersion in the industry, sufficiently low transport costs result in a core‐periphery location where nobody bears tariff burdens. We show that the world economy would be in a much better position under an international co‐ordination scheme, which differs from models proposed in previous studies.

We develop a multisector general equilibrium model of a system of cities to study the quantitative significance of industrial structure in determining spatial structure. We first identify three types of wedges that capture the extent to which the standard urban economic model fails to explain empirically: efficiency and labor wedges, and amenity. We then calibrate the model to Japanese regional data and run counterfactual exercises to identify the significance of each wedge in each sector. Our analysis shows (i) that the labor wedge plays the primary role in determining the spatial structure, and (ii) that the secondary sector is the most influential.

We construct a model of market-share contracts with vertical externalities. When a dominant supplier offers a linear wholesale price to a retailer, vertical externalities, well-recognized as double-marginalization problems, arise in the vertical relation. The dominant supplier facing vertical externalities charges a wholesale price that is excessively high for both the vertical relation and social welfare. Under market-share contracts, the retailer can commit to increase the sales of goods produced by the dominant supplier for a lower wholesale price. We point out that this induces the vertical relation to engage in market-share contracts even in the absence of exclusionary effects in the upstream market. We also show that such contracts mitigate vertical externalities and improve social welfare.

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