This note provides a simple proof of the necessity of the transversality condition for the differentiable reduced-form model. The proof uses only an elementary perturbation argument without relying on dynamic programming. The proof makes it clear that, contrary to common belief, the necessity of...

This paper establishes (i) an extension of Michel's (1990, Theorem 1) necessity result to an abstract reduced-form model, (ii) a generalization of the results of Weitzman (1973) and Ekeland and Scheinkman (1986), and (iii) a new result that is useful particularly in the case of homogeneous...

This paper studies the endogenous relationship between direct foreign　investment (DFI) and trade restriction. A domestic labor union interested in both employment and wages bargains with a foreign firm and lobbies against foreign imports. By endogeneizing the wage rate and incorporating...

This paper examines how impatience interacts with inequalities in economic devel- opment. In a society of intrinsic inequality, we show that (i) poor households tend to bene…t more from positive shocks under decreasing marginal impatience (DMI) than un- der constant marginal impatience (CMI)...

This paper examines how impatience interacts with inequalities in economic development. In a society of intrinsic inequality, we show that (i) poor households tend to benefit more from positive shocks under decreasing marginal impatience (DMI) than uner constant marginal impatience (CMI) and...

This paper examines the role of dual sourcing (e.g., outside options) in vertical and horizontal relations. In a bilateral monopoly market, if either the upstream or downstream firm has outside options, the other firm could lose from seemingly positive shocks, e.g., market expansion or...

This paper examines the relationship between resource development and industrialization. When transport costs are high, the region with a more valuable natural resource enjoys a higher welfare than the other region. However, as transport costs decrease, firms begin to move out of the region,...

We model the production allocation choices of a multinational enterprise (MNE) in a three-country framework-one northern country and two southern ones. Products made in the South are of lower quality than those made in the North. Substitutability between goods differs due to variations in...

This paper models the interactions of a labor union and a monopoly firm under an import quota in a small open economy. The distorted equilibrium is depicted in a diagram, in which wages and employment in both sectors, and the monopoly rent, can be identified. The imposition of an import quota in...

This paper examines the pollution haven hypothesis using a spatial-economy model of two countries and two sectors. The manufacturing sector generates cross-border pollution which reduces cross-sectoral productivity of agricultural goods, and lowers local income. We derive a demand-reducing...