We examine the case of payback killings and similar retributive sanctions in the context of a transplant regime such as that existing in Papua New Guinea. This is a post-colonial regime with multiple overlaid legal systems, with significant negative interaction existing between the different regimes. We explain how multiple regimes can co-exist in the context of negative externalities. To explain such an outcome, we provide a simple model for considering the interaction between legal regimes within a single jurisdiction. We demonstrate that, even when the fundamental relationship between such regimes is to behave as substitutes for one another, the existence of negative externalities between the enforcement technologies can result in the withdrawal of enforcement efforts. We term this phenomenon legal dissonance – the situation in which legal regimes interact negatively in their production technologies. This model is then applied to the post-colonial state of Papua New Guinea where we use survey data to identify significant negative production externalities in the enforcement of informal law. We suggest that disorder may be the outcome of too much law.
Modern agriculture relies on a small number of highly productive crops and the continued expansion of agricultural land area has led to a significant loss of biodiversity. In this paper we consider the macroeconomic consequences of a continued expansion of modern agriculture from the perspective of agricultural productivity and food production: as the genetic material supporting agriculture declines, pests and pathogens become more likely to adapt to crops and proliferate, increasing crop losses due to biological hazards. To evaluate the macroeconomic consequences of a reduction in agricultural productivity associated with the expansion of agriculture, we employ a quantitative, structurally estimated model of the global economy in which economic growth, population and food demand, agricultural innovations, and the process of land conversion are jointly determined. We show that even a small impact of global biodiversity on agricultural productivity calls for both a halt in agricultural land conversion and increased agricultural R&D in order to maintain food production associated with population and income growth.
This paper examines with a case study of Beijing, China, the health benefits that could be reaped from urban air quality improvements. The study implements a household survey to collect information about the yearly medical expenditures and lost days of work, to estimates the total costs of illness (COI) borne by a typical individual due to airborne diseases. The results of this survey provide a lower bound for the health costs borne by the urban population of Beijing due to air pollution. We find that the average individual COI in our sample is more than 3000 yuan per year, corresponding to almost one month of the average wage (slightly more than 500 US$ per year). This is quite sizeable, considering that it represents just the minimum benchmark for the damages caused by pollution to health. This result indicates that Beijing could benefit quite substantially from reducing air pollution in terms of health costs: if it could completely eliminate pollution, the savings in terms of COI would range in an order of magnitude of 21 million yuan per year only from hospitalized cases.
This paper applies a novel empirical approach to characterising the horizontalness and verticalness of affiliates based on Yeaple’s complex FDI concept. In its simplest form, horizontalness is measured as affiliates' local sales share while their verticalness is measures as their share of non-local sourcing of intermediates. Japanese affiliates in most sectors and nations are partly vertical and partly horizontal but those in North American are far more ‘horizontal’ than those in the EU and Asia. Affiliates became more vertical between 1996 and 2005. A four-way sales and sourcing split (host, home, regional and RoW) suggests that affiliates act as nodes in regional production networks – especially in Asia. We posit several hypotheses that could be tested with our empirical approach.
The multilateralisation of regionalism takes different forms when applied to deep versus shallow regional trade agreements (RTAs). Shallow agreements focus on discriminatory tariffs; hence, multilateralisation strives mainly to reduce discrimination. Deep agreements focus on the disciplines necessary to foster international production sharing; key provisions often resembling unilateral liberalisations that just happen to be bound by an RTA. In this case, multilateralisation achieves network externalities and solves co-ordination problems. This paper suggests a novel framework for thinking about the costs and benefits of multilateralising the provisions in deep RTAs, including those that seem set to appear in the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP).
Global production sharing is determined by international cost differences and frictions related to the costs of unbundling stages spatially. The interaction between these forces depends on engineering details of the production process with two extremes being ‘snakes’ and ‘spiders’. Snakes are processes whose sequencing is dictated by engineering; spiders involve the assembly of parts in no particular order. This paper studies spatial unbundling as frictions fall, showing that outcomes are very different for snakes and spiders, even if they share some features. Both snakes and spiders have in common a property that lower frictions produce discontinuous location changes and ‘overshooting’. Parts may move against their comparative costs because of proximity benefits, and further reductions in frictions lead these parts to be ‘reshored’. Predictions for trade volumes and the number of fragmented stages are quite different in the two cases. For spiders, a part crosses borders at most twice; the value of trade increases monotonically as frictions fall, except when the assembler relocates and the direction of parts trade is reversed. For snakes the volume of trade and number of endogenously determined stages is bounded only by the fragmentation of the underlying engineering process, and lower frictions monotonically increase trade volumes.
This paper looks at the problem of information control behind the unsustainable levels of air pollution in China. In particular, it focuses on a large urban area, Beijing, and it examines the role of the public, government-controlled information and the adaptation choices of households in response to signals about high pollution. Our analysis is based on a simple theoretical framework in which people migrate from rural areas to polluted cities, receiving a signal from the government about urban pollution; hence, they decide whether to adapt to pollution or not. We find that the government has no incentive to ensure sustainable air quality, as it can distort pollution information in order to attract cheap labour. We then analyse empirically two different air pollution indexes from different sources and agents’ behaviour in an original household survey collected in Beijing. We find that the official air pollution values are systematically distorted, creating perverse incentives for households to react to bad air quality, especially for people who rely on government-controlled sources of information.
