An Analysis of Optimal Size for a Special Economic Zone
We use a general equilibrium framework with training costs to characterize a special economic zone which uses foreign capital and local labor. Competitive equilibrium without government intervention leads to "overflow" of local labor in the foreign enclave. A sector-specific wage tax implements the "first-best" level of employment in the special economic zone, justifying active government intervention. Our result holds in the extended version of the basic model.
Year of publication: |
1997
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Authors: | Marjit, Sugata ; Beladi, Hamid |
Published in: |
Swiss Journal of Economics and Statistics (SJES). - Schweizerische Gesellschaft für Volkswirtschaft und Statistik / Société Suisse d"Économie et de Statistique - SGVS/SSES, ISSN 0303-9692. - Vol. 133.1997, II, p. 153-164
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Publisher: |
Schweizerische Gesellschaft für Volkswirtschaft und Statistik / Société Suisse d"Économie et de Statistique - SGVS/SSES |
Saved in:
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