Trade and Foreign Direct Investment in China: A Political Economy Approach

Size: px
Start display at page:

Download "Trade and Foreign Direct Investment in China: A Political Economy Approach"

Transcription

1 Trade and Foregn Drect Investent n Chna: A Poltcal Econoy Aroach by Lee G. Branstetter Det. o Econocs, Unv. o Calorna, Davs and NBER and Robert C. Feenstra Det. o Econocs, Unv. o Calorna, Davs, Haas School o Busness, Unv. o Calorna, Berkeley, and NBER Revsed, March 999 Acknowledgeents: We thank Chen Chun-La, Wen Ha, Davd L, Barry Naughton, Danel Rosen, Scott Rozelle, Edward Steneld, Wlla Sknner, Erc Thun, Shang-Jn We, Wng Woo, Alwyn Young and senar artcants at the Unversty o Mchgan and the World Bank or helul coents and suggestons. We are ndebted to a large tea o research assstants, ncludng Natasha Hseh, Songhua Ln, Kaoru Nabesha, Shun-l Yao, and Davd Yue. Branstetter wshes to thank the Jaan Foundaton Center or Global Partnersh and the Socal Scence Research Councl or nancal suort o the eldwork coonent o ths roject, and he thanks the any anonyous Chna-based ultnatonal eecutves who rovded ther nsghts concernng the envronent conrontng oregn rs n Chna. He also acknowledges the suort o a Unversty o Calorna Faculty Research Grant. Feenstra thanks the Natonal Scence Foundaton or nancal suort. All errors are the sole resonsblty o the authors.

2 Trade and Foregn Drect Investent n Chna: A Poltcal Econoy Aroach Abstract We vew the oltcal rocess n Chna as tradng o the socal benets o ncreased trade and oregn drect nvestent, aganst the losses ncurred by state-owned enterrses due to such lberalzaton. A odel drawng on Grossan and Helan (994, 996) s used to derve an ercally estable governent objectve uncton. The key structural araeters o ths odel are estated usng rovnce-level data on oregn drect nvestent and trade lows n Chna, over the years We nd that the weght aled to consuer welare s between one-th and one-twelth o the weght aled to the outut o state-owned enterrses. We nd that governental reerences have shted over te, but even n recent erods the weght on consuer welare s only one-hal o the weght on state-owned enterrses. Ths suggests that Chna ay nd t oltcally dcult to ollow through wth lberalzng ts trade and nvestent reges, such as under ts WTO accesson roosal. Lee Branstetter Robert Feenstra Deartent o Econocs Deartent o Econocs Unversty o Calorna Unversty o Calorna Davs, CA 9566 Davs, CA 956 (530) (530)

3 . Introducton In recent years, ew develoents n nternatonal econocs have elcted ore nterest or strred ore controversy than the sudden eergence o Chna as a tradng naton and anuacturng center. Chna s hgh rate o econoc growth snce the adoton o ore lberal econoc olces under Deng Xao-Png n the late 970s, whle erhas eaggerated by the ocal statstcs, s nevertheless a stunnng accolshent. 2 In the sace o less than a generaton, Chna has transored tsel ro a oor naton alost coletely cut o ro the global econoy to one o the world s ost ortant sulers o labor-ntensve anuactures. Its arrval nto the ranks o tradng natons wll be colete when t s has acheved ts ntenton to jon the World Tradng Organzaton (WTO). Nevertheless, a nuber o econosts have recently called nto queston the sustanablty o Chna s current rates o GDP and eort growth. These observers have tended to ont out the shortcongs o Chna s socalst arket econoy, ocusng on the nablty o the governent to rase revenue by tang the new rvate econoy, the robles the governent has encountered n reorng state owned enterrses, the dstortons created by Chna s dualstc trade rege, and the ountng non erorng loans roble n the Chnese bankng sector. 3 In a strkng aer, Alwyn Young (997) has recently argued that Chna s hgh trade/gdp rato s a sgn o ntra-natonal trade barrers rather than nternatonal econoc oenness. Partcularly snce the onset o the East Asan nancal crss, the consensus has shted to a ore essstc outlook or Chna. The realty o ortant dstortons n the Chnese econoy, and artcularly n ts nternatonal trade rege, s ncreasngly evdent. We oer, n ths aer, what s to our For an ecellent overvew o ths eergence, see Naughton (996).

4 2 knowledge the rst attet to use the theoretcal odels o oltcal econoy oneered by Grossan and Helan (994) to analyze these dstortons. We vew the oltcal rocess n Chna as tradng o the socal benets o ncreased trade and oregn drect nvestent, aganst the losses ncurred by state-owned enterrses due to such lberalzaton. We wrte down an elct theoretcal odel o the olcy orulaton rocess whch, we argue, catures ortant eatures o Chnese nsttutonal realty. We then use ths odel to derve an ercally estable governental objectve uncton. The key structural araeters o ths odel are estated usng rovnce-level data on oregn drect nvestent and trade lows n Chna n the years These estates allow us to quanty the relatve weghts laced on secal nterests and general econoc welare. In strkng contrast to Goldberg and Magg s (997) results wth U.S. data, we nd quanttatve evdence that Chnese rovncal and central governents have gven uch greater weght to the secal nterests o state-owned enterrses than to general econoc welare. Moreover, our ercal raework allows us to estate how the weghts n the governent s objectve uncton have shted over te. In other words, we can quanty the etent to whch Chnese oltcal econoy has becoe ore arket-orented over the course o the reor erod. Fnally, our raework allows us to estate the act on governental utlty o roosed changes n Chna s trade rege. As an eerent, we estate the act o the tar reductons Chna has oered as art o ts bd or WTO accesson. The lcatons o these ndngs or the oltcal econoy lterature and or the debate over econoc reor n Chna are dscussed n the concluson. The roos o roostons are gathered n a searate Aend. 2 See Sachs and Woo (997) or a dscusson wth soe reerence to the robles o ocal Chnese statstcs. 3 Agan, Naughton (996) rovdes an ecellent overvew o these ssues.

5 3 2. Polces towards Foregn Drect Investent and Trade A corehensve descrton o Chnese econoc reor, even one ocused solely on the evoluton o Chna s trade and FDI rege, s well beyond the scoe o ths aer. The reader s drected to Lardy (992) and Naughton (995) or two well-regarded studes. 4 Here, we quckly suarze soe o the ost ortant olcy shts that drectly relate to FDI and trade. The oral ban on oregn drect nvestent n Chna was lted n 972, n the wake o the vst o U.S. Presdent Rchard Non to Chna. Ths oened the doors or a dloatc rarocheent between Chna and several ajor ndustral natons. However, a nuber o severe restrctons on FDI reaned n lace ncludng a ban on eternal nancng o FDI rojects so that there was very lttle nward nvestent untl olces were draatcally changed n 979. By 979, Deng Xao-Png had consoldated hs ower wthn the Chnese governent and the Counst Party. At hs behest, a new Law on Jont Ventures was assed, rovdng a basc raework under whch oregn rs were allowed to oerate. Restrctons on eternal debt and equty nance were relaed, and controls on oregn trade were reduced. Provncal and local governents were allowed consderable reedo n regulatng the jont ventures that were establshed wthn ther jursdctons. In the sae year, our secal econoc zones (SEZ) were establshed n whch oregn rs were oered reerental ta and adnstratve treatent, and gven an unusually ree hand n ther oeratons. 5 In artcular, these zones charged a reduced ta o 5% on busness ncoe o oregn alated rs (as coared to 33% or doestc rs), but these taes were not leved durng the rst two years o oeraton 4 The ateral n ths secton also draws on Grub and Ln (99) and Poret (99). 5 These SEZs ncluded Shenzhen (across the border ro Hong Kong), Zhuha (across the border ro Macau), Shantou (on the Guangdong coast acng Tawan) and Xaen (drectly across the Tawan Strats ro Tawan).

6 4 and charged at one-hal o the ull rate n the thrd through th years. 6 In addton, wholly oregn owned enterrses were ertted or the rst te. It s ortant to recognze that none o the orgnal secal econoc zones were develoed ndustral centers n 979. In act, these zones were establshed outsde the state s ndustral centers to revent contanaton o Chnese heavy ndustry by outsde nluences. These eerents n attractng oregn drect nvestent were qute successul. In 984, ourteen addtonal areas known as oen coastal ctes, were granted slar eetons ro taes and adnstratve rocedures n a bd to attract FDI. 7 These ctes leved a ta rate o 24% on oregn alated rs, and were granted local authorty to arove oregn nvestent or rojects under $30 llon (now $50 llon). The end o the 970s and early 980s also arked a erod o roound reor n Chnese trade olcy. U through the 970s, Chnese trade was essentally onoolzed by twelve state-owned tradng coanes, each wth resonsblty or a derent set o coodtes. Trade took lace wthn the contet o a lanned econoy and thereore all trade was subject to very eactng quanttatve barrers. The state onooly on oregn trade was ended at the end o the 970s, and what cae to relace t by the d 980s were, n essence, two searate tradng reges one or the oregn-nvested enterrses (FIEs) and one or natve Chnese enterrses. 8 The trade rege under whch the FIEs oerated was by ar the ore lberal. Unlke doestc enterrses, whch had to ort and eort through state-owned oregn trade coanes, FIEs were allowed to engage n nternatonal trade drectly. In addton, eort-orented FIEs were allowed duty-ree ort o raw aterals, coonents, and 6 Naughton (996,. 30). The dscreancy between the cororate ta or oregn-alated and doestc rs has led any Chnese rs to seek oregn artners, soetes through settng u cororatons n Hong Kong. Ths so-called round trng accounts or soe (unknown) racton o the oregn nvestent nto Chna. 7 The entre sland o Hanan was declared a secal econoc zone n Borrowng ro the Chnese ternology, Naughton (996) reers to these two reges as the eort rocessng and ordnary trade reges, resectvely and he rovdes an ecellent dscusson o the.

7 5 catal equent or eort roducton. They also qualed or concessonary ncoe ta rates and ta holdays. As noted, doestc rs stll had to trade ndrectly, obtanng orts and channelng eorts through oregn trade coanes (FTCs). 9 To be sure, the orgnal twelve onooles were broken u, and by the late 980s there were ore than 5,000 FTCs oeratng throughout Chna. However, ost o these FTCs were lted to trade n certan coodtes, oeraton n a artcular rovnce, and were only allowed to servce certan knds o custoers. Thus, doestc enterrses seekng to nteract wth the global econoy had to work through a legally andated, ar ro erectly coettve layer o ddleen. On to o ths, ost doestc orts are not duty-ree, so that doestc rs have had to contend wth Chna s oral and noral barrers to trade. Whle tars have coe down over the course o the 980s and 990s, they are stll hgh. On to o these tar barrers, soe 20 ercent o Chnese orts are subject to oral non-tar barrers The net ajor regulatory change n FDI cae n 986, wth the leentaton o the so-called Twenty-two Regulatons. These changes reresented a ajor lberalzaton whch aled throughout Chna. Foregn nvested enterrses were ade elgble or reduced busness ncoe ta rates regardless o locaton, and were gven ncreased anageral autonoy. Tght controls on the rettance o rot n oregn currences were lted. In addton, the Twentytwo Regulatons desgnated two categores o oregn nvestents as beng elgble or addtonal secal benets eort orented rojects (dened as rojects eortng 50% or ore o ther roducton value) and technologcally advanced rojects (dened as rojects whch ugrade doestc roducton caacty through the use o advanced technology). 9 Over te, soe larger enterrses were granted ndeendent ort rghts, but ths was generally restrcted to larger enterrses.

8 6 The Twenty-two Regulatons also set u an aroval rocess or oregn drect nvestent rojects whch reans n lace today, albet wth soe odcaton. The aroval rocess s a cole one nvolvng thrteen agences and branches o the central governent as well as local Foregn Econoc Relatons and Trade Cossons. Whle the oral regulatory raework les substantal centralzaton o ower over the aroval rocess and subsequent regulatory oversght o FIEs, there s consderable debate aong Chna scholars as to how uch the central governent ntervenes n the oversght o FIEs ater they are establshed. In ractce, there sees to be a consderable degree o de acto local autonoy n regulatng FIEs. The net ajor sht n FDI n Chna arked not so uch a regulatory sht as a change n the cooston o oregn nvestors. FDI n Chna slowed brely ater the events o Tananen square n 989, but resued and quckly grew n the 990s. 0 Whereas FDI n Chna n the 980s had been overwhelngly donated by Hong Kong and Tawan-based nvestors seekng to elot relatvely low cost labor n the SEZs or eort rocessng, n the 990s FDI n Chna ncreasngly conssted o nvestents by Western and Jaanese ultnatonals seekng to serve the Chnese arket through local roducton caacty. It s also ortant to ont out that FDI nlows n the ost-990 area were uch larger than those o the 980s, both n absolute quanttes and as a ercentage o GDP. Fnally, n the later 980s and 990s, FDI began to low n sgncant quanttes nto the centers o Chna s (state-owned) heavy ndustry anuacturng and nance. O these, Shangha and the neghborng rovnces are the clear standouts. Fgure llustrates the cuulatve stock o FDI nto Chna s 30 rovnces (not countng the Hong Kong Secal Adnstratve Regon) n 995. The varaton across regons s qute 0 Naughton (996), aong others, suggests that there was a de acto loosenng o the ocal regulatons on oregn drect nvestent whch allowed ultnatonals to skrt the ocal eort requreents. Essentally, eort requreents were ncreasngly gnored or the denton o a technologcally advanced roject was broadened to allow even not artcularly technology-ntensve rs to set u lants to serve the Chnese arket.

9 7 strkng, wth Guangdong rovnce, the ste o three o the ntal our SEZs, and neghborng Fujan, the ste o the ourth, antanng donant ostons as the ost ortant stes o FIE actvty. On the other hand, Shangha and the surroundng rovnces have receved very substantal nlows startng ro a very low base n the late 980s, such that they have collectvely becoe the net-largest recent area by Fr Intervews Gven the enorous varatons n central governent olcy and regonal governent leentaton across rovnces and across te, we elt t was ortant to obtan soe drect qualtatve noraton concernng the regulatory envronent on the oeratons o ultnatonal rs. To ths end, one o the authors traveled to Chna n the wnter o 998, ntervewng eecutves and orer eecutves o ore than 20 ultnatonals, consultng rs, research nsttutons, and advsory agences n Chna. We have also consulted wth Chna eerts n the U.S. and n Chna tsel. One o the ost ortant ressons obtaned n Chna could be suarzed as ollows: For every anecdote n Chna, there s an equal and ooste anecdote. One coes to understand the lts o qualtatve eld research rather quckly, as the eerence o rs vares so wdely across ndustres, rovnces, rs, and te. Ths truth was orcbly drven hoe to the authors when derent rs n the sae ndustry n the sae rovnce would tell strkngly derent stores about ther eerence n the Chnese arket. Nevertheless, soe consstent thees eerged ro our dscussons wth r anagers, whch renorce soe o the key assutons n our odelng raework. The rst s that ost o the oregn nvested enterrses we ntervewed do, n act, coete wth state-owned rs to soe degree. In soe ndustres, the FIEs have already collectvely obtaned a donant arket

10 8 oston, such that the state-owned enterrses have been conned to the less rotable low end o the roduct arket. The second s that the Chnese governent, both natonal and local, s acutely aware o ths coetton, and has taken stes to ede the ablty o oregn rs to coete n the Chnese arket. Scholars o the Chnese econoy wll be alar wth the neus o restrctons on the oeratons o ultnatonals that were descrbed to us by ultnatonal eecutves. They nclude eort requreents, localzaton requreents, requreents or technology transer, restrctons on doestc arket access, and dcultes n recrutng and retanng key ersonnel a eature o the Chnese econoy whch s eacerbated by governent olcy. A nuber o ultnatonal anagers also colaned btterly about attets by rovncal and even local governents to etract unds ro oregn rs through both legal and llegal surcharges and taes. Whle, on aer, oregn rs get avorable ta and ort treatent, n ractce, gurng n all o the restrctons and etralegal surcharges, t s clear that, n any cases, oregn rs are oeratng wth a clear, governent-engneered dsadvantage. Thrd, our resuton o lted econoc ntegraton aong Chnese rovnces drawn ro Young (997) receved surrsngly strong suort ro dscussons wth eatrate anagers and natve Chnese eecutves. Whle the etent o local rotectons vares across ndustres, t s seen as a barrer to growth and econoc ecency by nearly every r we ntervewed. As one Shangha-based advsor to Aercan rs ut t, There s no Chna arket. There are several Chna arkets, and none o the are as bg as you thnk. These varous nerences ro our r ntervews wll be bult nto the odel that we roose to cature the tradeos aced by rovncal and central authortes, as they consder the olces towards oregn drect nvestent and trade.

11 9 4. The Model The odel we develo draws heavly ro Grossan and Helan (996), who aly the oltcal-econoy raework develoed n ther 994 aer to the ssue o ultnatonals. Seccally, they nvestgate whether the entry o ultnatonals wll aect the level o rotecton, and conversely, n a odel where the doestc ndustry s akng caagn contrbutons. In our odel, we wll suose nstead that the doestc ndustry s owned by the governent, whch gves etra weght to ndustry rots n ts objectve uncton. The resence o ultnatonals resents a otental threat to the state-owned enterrses through roduct arket coetton. L and Chen (998) use a raework lke ths to eane the governent s ablty to etract rents ro the ultnatonals, and we wll use olcy nstruents slar to thers. Our key ndngs concernng the shae o the governent s objectve uncton, deendng on the entry o ultnatonals, are not develoed n ether o these related aers, however. Because soe eatures o our odel are alar, we wll try to resent t as concsely as ossble. The ollowng onts suarze the an coonents: Regons: We wll treat the regons wthn the country as dstnct, ollowng Young s (997) thess that the rovnces wthn Chna have only lted trade wth each other. Thus, the odel below descrbes each regon, whch wll der n ters o ther underlyng araeters. Products: Each regonal econoy roduces a nuerare good denoted by 0, and a derentated roduct whch s a CES aggregate o the varous varetes. There are three sources As Naughton (996) and several other authors have noted, the Chnese governent stll reles on rettances ro state-owned enterrses or about two-thrds o ts revenue. Ths s also true at the rovncal level. The rovncal governent o Yunnan s ruored to obtan nearly all o ts revenue ro the rovncal tobacco onooly.

12 0 or the roducts: n h varetes are roduced by hoe rs; n varetes are roduced by oregn rs, where o these are roduced locally by ultnatonals, and the reanng (n -) are orted nto the country. Consuers: Consuer reerences are gven by, U θ ( θ) / θ = 0, θ > 0, θ, () θ where the CES aggregate s, ( )/ ( )/ ) / /( ) [ n (n ) ] h h ( =, >. (2) The values j denote consuton o the derentated varetes ro source j=h (hoe rs), (orted), and (ultnatonals). Lettng j denote the rces o each goods j=h,,, we can aze utlty subject to the budget constrant 0 n h h h (n -) =I to obtan: θ j = j q, j = h,,, θ and = q, (3) where q s a rce nde, q = /( ) [ n (n ) ]. h h (4) Note the > s the own-rce elastcty o deand or each varety, whle θ > 0 s the elastcty o deand or the CES aggregate. We add the restrcton that > θ, whch ensures that the cross-rce elastcty or each varety s ostve.

13 Frs: Costs or the locally roduced roducts are c j, j=h,. Costs or roducts roduced abroad are c, but also ace a secc tar o τ, so that argnal costs becoe c τ. Then rs at hoe and abroad aze rots gven by, π j = ( j c j ) j, j=h,, π = [ (c τ)] h. (5a) (5b) Usng the deand equatons n (3), and otzng over the choce o j, we obtan the rces: = c j, j h,, (6a) j = = ( c τ). (6b) Substtutng these rces nto (5), we obtan the rots o each tye o r: π j = j j /, j=h,,, (7) Factors: We wll suose that labor s the only actor o roducton, and one unt o the nuerare s roduced wth one unt o labor, so wages are unty. Whle workers n the hoe ndustry roducng derentated roducts earn unty, we shall assue that the ultnatonal rs ay a wage reu o (w) > 0. 2 Deste ths reu, we wll stll suose that s t cheaer or the ultnatonal to suly local deand ro local roducton, than ro orts whch are subject to the tar. That s, we assue, 2 The estence o ths wage reu s strongly conred n our data and n our ntervews wth ultnatonal anagers. The anagers suggested that, snce ultnatonals tycally eloy ore catal and technology ntensve roducton rocesses, they requre the best workers n the local labor ool. Hence, they ay what the labor lterature has reerred to as ecency wages. Other case studes have docuented the need to ay Chnese workers eloyed n ultnatonals a wage reu to oset the envy created by the even hgher wage earned by ther Aercan counterarts n these rs.

14 2 c < c τ. (8) Ths assuton s needed to ensure that the ultnatonal rs have any nterest n enterng the local arket. Polcy towards ultnatonals: Each oregn r aces the decson o whether to suly locally through orts, or through settng u a local lant whch requres a ed cost o F>0. We suose that the governent also charges the ultnatonal an rot ta o λ > 0. Ths nstruent s suosed to relect the vast range o actual olces used n Chna to etract rents ro ultnatonals, and not just the nonal ta on ultnatonals. For eale, the act that ost ultnatonals have had to use local artners relects an lct ta on ther rots, whch are shared wth the artner; slarly, the land-use ees that are coonly charged reduce the ultnatonals rots. By odelng these olces as a ta on rots, we are abstractng ro the necences caused by actual olces (such as local content restrctons, or eale). 3 Ths s slar to the entry ee used by L and Chen (998), and s n the srt o Grossan and Helan (994), who draw on Bernhe and Whnston (984) to argue that the outcoe o oltcal contests can be ecent. The rots earned locally are thus (-λ)π -F, wth π dened by (5a) and (6a). Alternately, the ultnatonal could just eort to the hoe country, and earn π dened by (5b) and (6b). Thus, entry wll occur and only (-λ)π -F > π. Usng (7), ths condton s wrtten: ( λ) F. (9) 3 O course, brbes ad to allow ultnatonals to enter are another eale o the rot ta. We (998) argues that corruton n Chna, whch ncludes the need or questonable ayents, acts as a sgncant deterrent to oregn drect nvestent.

15 3 We wll assue that when =λ=0 then (9) holds as a strct nequalty. Ths eans that or soe ostve λ, entry o ultnatonals wll occur. Governent Objectve Functon: We can now state the total returns to each nterest grou, begnnng wth consuers/workers, who receve a weght o α n the objectve uncton. It s readly vered that azed utlty ro () s U = I q -θ /(θ), where I denotes labor ncoe. Wth a workers used er unt outut n the ultnatonals, the total wage reu s (w)a. The ultnatonal s rce s =wa /(-), so the total wage reu can be wrtten [(-)(w)/w]. Includng ths wthn labor ncoe, we obtan utlty o, U = = w L e w w L w q ( θ ) [n ( θ ) θ (n ) h h h ] (0) where L s the labor endowent o the regon. To obtan the second lne o (0), we cobne (3) and (4) to solve or [ nh hh (n ) ] = θ q. We wll suose that the doestc rs are state-owned, so these rots accrue to the regonal and natonal governent. Prots o the doestc rs are n h π h = n h h h /, ro (6). We gve revenue ro state-owned rs a weght β n the objectve uncton. Fnally, the governent etracts rents λπ ro the ultnatonals, and also collects tar revenue o τ(n ). These two sources o revenue are each gven weghts o unty. The objectve uncton or each regon s dened as,

16 4 G(,T,τ) αu βn h π h λπ τ(n ) h h h ) (n ) ( n ) ( L τ θ α β θ α α = () w ) )(w ( ) ( λ α θ α, where the equalty ollows usng (0). Several roertes o ths uncton are suarzed by: Lea θ β α = ) ( s ) ( ) ( G h θ τ ) ( s (2) θ λ α ) ( s w w where s j, j=h,, denotes the share o doestc sendng on hoe, orted or ultnatonal roducts. Then: (a) τ β λ α, a w w, then G s quas-concave. I θ> these condtons ensure that G s ncreasng, whle θ< then slghtly stronger condtons are needed; 4 (b) τ β λ α, n w w, then G s quas-conve. 4 When θ< we need to ultly the rght-hand sde o the nequalty n (a) by (-θ)/(-)>. Then or s sucently sall, G wll be ncreasng.

17 5 In (2), we show that G/ conssts o three ters. The rst nvolves s h, the share o hoe rs n doestc sendng, and relects the roduct arket coetton between the ultnatonals and the hoe rs: βs h s hgh as coared to α, then ths ter s negatve. The second ter relects the loss n ort revenue as ultnatonals enter, as rst analyzed by Brecher and Daz-Alejandro (977). The thrd ter relects the wage reu generated by eloyent n the ultnatonals and the rot ta leved on these rs, both o whch generate a gan n welare. Part (a) dentes condtons under whch G s an ncreasng and quas-concave uncton o, as llustrated n Fgure 2 on the curve labeled Hgh wage reu or taes. It s well known ro Brecher and Daz-Alejandro (977) that when oregn catal s taed at a sucently hgh rate, ths can reverse the declne n welare that otherwse occurs ro ther entry. Our odel adds the gan due to the wage reu ad by ultnatonals. Conversely, the wage reu and taes are low as n art (b), then G s nstead a quas-conve uncton o, as ndcated by the curve labeled Low wage reu and taes. In ths case, t s relatvely easy to choose the value o β or o the tar τ such that G / = 0 n (2). Such a crtcal ont wll be a global nu o G, as llustrated. 5 Whle Prooston gves us the roertes o G wth resect to, we do not suose that the governent drectly controls entry o ultnatonals. Instead, entry s nluenced through the ta rate λ and the tar rate τ, so the nuber o ultnatonal rs s wrtten as a uncton (λ,τ). Multnatonals react n the eected anner to changes n these olces: 5 A conve curve between hoe welare and the nlow o oregn catal was llustrated by Brecher and Daz- Alejandro (977, Fgure 2), when oregn catal was not beng taes. In ther odel, there was no wage reu.

18 6 Lea 2 When (9) holds as an equalty, then d < 0 and dλ d > 0. dτ We are now n a oston to setu and solve the governents roble. We suose that the central and the regonal governents jontly deterne the rents arorated ro the ultnatonals n each regon. The central governent also chooses the tar rate. Denotng regons by the subscrt, we let G [ (λ,τ),λ,τ] denote the objectve uncton or each regon. Then the rot ta and tar are chosen to solve: a λ, τ G [ ( λ, τ), λ, τ], (3) subject to (λ,τ) < n, whch s the au nuber o oregn rs wllng to enter any regon. Our strong assuton n wrtng the objectve uncton as n (3) s that the ta rate λ or one regon s searable ro that n another regon. Ths s an etree verson o Young s (997) thess that the rovnces n Chna have only lted trade wth each other. I there s no trade between rovnces, then they wll not be n coetton wth one another or oregn nvestent, because ultnatonals can only serve the arket where they locate. Whle ths case does not lterally aly n Chna, t s certanly true that oregn r ace restrctons on ther ablty to arket outsde ther edate area. 6 By assung an etree or o these restrctons, we greatly sly the governental decson roble. 6 Soe natve Chnese rs ace these restrctons as well. In ntervews, one Chnese eecutve rueully noted that whle the governent has been brngng n ultnatonal enterrses or twenty years, ew truly ultrovncal enterrses are allowed to oerate wthn Chna tsel!

19 7 We also denote all other varables n regon wth that subscrt, though or slcty we suose ths does not aly to the oregn rce, or the nuber o oregn rs n. The ollowng result descrbes the soluton to (3) over the choce o the ta rate λ, whle a dscusson o the soluton or tars τ s ostoned untl secton 7. Prooston Suose that G s ncreasng n. Then regon wll choose the ta rate λ to allow entry o ultnatonals to the ont where ether =n or, G = π λ = θ ( ) ( λ )s n s. (4) A ont satsyng (4) s a global au o G over the choce o λ rovded that w α w λ β τ a,, and also that s < (-)/(-θ) when (4) holds. The otalty condton (4) s llustrated at ont A n Fgure 2, where the sloe o the curve G equals π /( / λ ). Ths agntude relects the all n the revenue λ π when the ta rate s lowered to attract ore ultnatonals. That s, the regons are actng as onosonsts as they attract oregn catal. Ths can be contrasted wth the coetton or oregn catal that s oten odeled between ndustral countres or regons, and that s ruled out n our raework by the assuton o lted trade between the regons.

20 8 Condton (4) leads to a global otu under the condtons o Lea(a), and also s < (-)/(- θ), whch s autoatcally satsed when θ> so that (-)/(-θ)>. I nstead the condtons o Lea(b) hold, so that G s quas-conve n, then t s stll ossble or the roble (3) to have an nteror au: the act that the regons are actng as onosonsts, and recognze that ultnatonal entry s aected by the rot ta, leads to urther concavty n G [ (λ,τ),λ,τ] as a uncton o λ. In our estaton, we wll conr that the second-order condtons are n act satsed. We can now use the results ro Prooston to develo an estatng equaton. We add the subscrt to the varables n (2), and relace s wth -s h -s on the rght-hand sde. Ths s set equal to the rght-hand sde o (4), as requred or otalty. The resultng equaton can be sled by usng (9) as an equalty. Fnally, we also add a te subscrt to all relevant varables. We obtan the ollowng equaton or the share o sendng on roducts o ultnatonals n regon and year t: s t = βs ht w t w t η ( ) (s w α t w t ht s t τ ) t t s t t n t s t α ( ) λtπt θ) ( θ)(ft λtπ α( ) ) ( θ) w τ t t w t t (F ( t t t t 2 π λ t π ) (5) The rst ter on the rght-sde o (5) s the share o sendng on doestc state-owned rs, whch enters wth the coecent -β. Thus, the weght on state-owned rs n the regonal objectve uncton s sly obtaned as the coecent on ther share n the regresson (5). A

21 9 hgh weght on the state-owned rs ndcates that n regons where these rs are ore revalent, the share o ultnatonal rs wll be corresondngly reduced. The net ter on the rght o (5) s the wage reu ad by ultnatonals, whch has the coecent η α(-)(θ-)/(-θ). Followng ths s the wage reu tes the share o sendng on state-owned rs lus orts. When the wage reu s hgher, we eect that regons would be ore wllng to accet ultnatonals, and ths s conred by havng a ostve coecent α(-) on that varable. The estate o tsel coes ro the net ter, whch s the ad valore tar rate tes the share o sendng on orts. Ths ter relects the loss n tar revenue as ultnatonals enter, and the coecent s -. Thus, cobned wth the orer coecent we can recover an estate o α. The nal ter on the rst lne o (5) relects the nuber o ultnatonals tes the share o orts. For slcty we treat n, whch s the nuber o oregn rs wantng to eort or nvest n Chna, as constant over regons and te, and estate t as a coecent. The ters on the second lne o (5) are rather cole eressons o the rot ta collected n each regon, and the ed costs o entry, enterng theselves and nteracted wth the wage reu and tars. We have no way o easurng these ters, but t sees very lkely that they wll vary systeatcally across regons, and ossbly also over te. Thus, we wll odel the ters on the second lne o (5) as: ( ) λtπt ( θ)(ft λtπ t α( ) ) ( θ) 2 w t w t τ t t (F t π λ t t π t = γ ) δ t u t, (6) where γ and δ t and rovnce and year ed-eects, and u t s a rando error assued to be uncorrelated wth the varables on the rst lne o (5). Gatherng all these ters nto ed-

An Alternative Way to Measure Private Equity Performance

An Alternative Way to Measure Private Equity Performance An Alternatve Way to Measure Prvate Equty Performance Peter Todd Parlux Investment Technology LLC Summary Internal Rate of Return (IRR) s probably the most common way to measure the performance of prvate

More information

The Subtraction Rule and its Effects on Pricing in the Electricity Industry

The Subtraction Rule and its Effects on Pricing in the Electricity Industry Dscusson Paer No 04- The Subtracton Rule and ts Effects on Prcng n the Electrcty Industry Walter Elberfeld Dscusson Paer No 04- The Subtracton Rule and ts Effects on Prcng n the Electrcty Industry Walter

More information

BANDWIDTH ALLOCATION AND PRICING PROBLEM FOR A DUOPOLY MARKET

BANDWIDTH ALLOCATION AND PRICING PROBLEM FOR A DUOPOLY MARKET Yugoslav Journal of Operatons Research (0), Nuber, 65-78 DOI: 0.98/YJOR0065Y BANDWIDTH ALLOCATION AND PRICING PROBLEM FOR A DUOPOLY MARKET Peng-Sheng YOU Graduate Insttute of Marketng and Logstcs/Transportaton,

More information

Economics of First-Contact Email Advertising

Economics of First-Contact Email Advertising Econocs o Frst-Contact Eal Advertsng Ra Goal Oeratons and Inoraton Manageent Unversty o Connectcut Storrs, CT, 0669 Tel: 860 486-408 Eal: ragoal@busnessuconnedu Arvnd K Trath Manageent Scence eartent,

More information

Optimal maintenance of a production-inventory system with continuous repair times and idle periods

Optimal maintenance of a production-inventory system with continuous repair times and idle periods Proceedngs o the 3 Internatonal Conerence on Aled Mathematcs and Comutatonal Methods Otmal mantenance o a roducton-nventory system wth contnuous rear tmes and dle erods T. D. Dmtrakos* Deartment o Mathematcs

More information

An Electricity Trade Model for Microgrid Communities in Smart Grid

An Electricity Trade Model for Microgrid Communities in Smart Grid An Electrcty Trade Model for Mcrogrd Countes n Sart Grd Tansong Cu, Yanzh Wang, Shahn Nazaran and Massoud Pedra Unversty of Southern Calforna Departent of Electrcal Engneerng Los Angeles, CA, USA {tcu,

More information

Portfolio Loss Distribution

Portfolio Loss Distribution Portfolo Loss Dstrbuton Rsky assets n loan ortfolo hghly llqud assets hold-to-maturty n the bank s balance sheet Outstandngs The orton of the bank asset that has already been extended to borrowers. Commtment

More information

Institute of Informatics, Faculty of Business and Management, Brno University of Technology,Czech Republic

Institute of Informatics, Faculty of Business and Management, Brno University of Technology,Czech Republic Lagrange Multplers as Quanttatve Indcators n Economcs Ivan Mezník Insttute of Informatcs, Faculty of Busness and Management, Brno Unversty of TechnologCzech Republc Abstract The quanttatve role of Lagrange

More information

Can Auto Liability Insurance Purchases Signal Risk Attitude?

Can Auto Liability Insurance Purchases Signal Risk Attitude? Internatonal Journal of Busness and Economcs, 2011, Vol. 10, No. 2, 159-164 Can Auto Lablty Insurance Purchases Sgnal Rsk Atttude? Chu-Shu L Department of Internatonal Busness, Asa Unversty, Tawan Sheng-Chang

More information

Calculation of Sampling Weights

Calculation of Sampling Weights Perre Foy Statstcs Canada 4 Calculaton of Samplng Weghts 4.1 OVERVIEW The basc sample desgn used n TIMSS Populatons 1 and 2 was a two-stage stratfed cluster desgn. 1 The frst stage conssted of a sample

More information

Answer: A). There is a flatter IS curve in the high MPC economy. Original LM LM after increase in M. IS curve for low MPC economy

Answer: A). There is a flatter IS curve in the high MPC economy. Original LM LM after increase in M. IS curve for low MPC economy 4.02 Quz Solutons Fall 2004 Multple-Choce Questons (30/00 ponts) Please, crcle the correct answer for each of the followng 0 multple-choce questons. For each queston, only one of the answers s correct.

More information

Module 2 LOSSLESS IMAGE COMPRESSION SYSTEMS. Version 2 ECE IIT, Kharagpur

Module 2 LOSSLESS IMAGE COMPRESSION SYSTEMS. Version 2 ECE IIT, Kharagpur Module LOSSLESS IMAGE COMPRESSION SYSTEMS Lesson 3 Lossless Compresson: Huffman Codng Instructonal Objectves At the end of ths lesson, the students should be able to:. Defne and measure source entropy..

More information

Tailoring Fuzzy C-Means Clustering Algorithm for Big Data Using Random Sampling and Particle Swarm Optimization

Tailoring Fuzzy C-Means Clustering Algorithm for Big Data Using Random Sampling and Particle Swarm Optimization Internatonal Journal of Database Theory and Alcaton,.191-202 htt://dx.do.org/10.14257/jdta.2015.8.3.16 Talorng Fuzzy -Means lusterng Algorth for Bg Data Usng Rando Salng and Partcle Swar Otzaton Yang Xanfeng

More information

NON-CONSTANT SUM RED-AND-BLACK GAMES WITH BET-DEPENDENT WIN PROBABILITY FUNCTION LAURA PONTIGGIA, University of the Sciences in Philadelphia

NON-CONSTANT SUM RED-AND-BLACK GAMES WITH BET-DEPENDENT WIN PROBABILITY FUNCTION LAURA PONTIGGIA, University of the Sciences in Philadelphia To appear n Journal o Appled Probablty June 2007 O-COSTAT SUM RED-AD-BLACK GAMES WITH BET-DEPEDET WI PROBABILITY FUCTIO LAURA POTIGGIA, Unversty o the Scences n Phladelpha Abstract In ths paper we nvestgate

More information

17 Capital tax competition

17 Capital tax competition 17 Captal tax competton 17.1 Introducton Governments would lke to tax a varety of transactons that ncreasngly appear to be moble across jursdctonal boundares. Ths creates one obvous problem: tax base flght.

More information

DEFINING %COMPLETE IN MICROSOFT PROJECT

DEFINING %COMPLETE IN MICROSOFT PROJECT CelersSystems DEFINING %COMPLETE IN MICROSOFT PROJECT PREPARED BY James E Aksel, PMP, PMI-SP, MVP For Addtonal Informaton about Earned Value Management Systems and reportng, please contact: CelersSystems,

More information

How Much to Bet on Video Poker

How Much to Bet on Video Poker How Much to Bet on Vdeo Poker Trstan Barnett A queston that arses whenever a gae s favorable to the player s how uch to wager on each event? Whle conservatve play (or nu bet nzes large fluctuatons, t lacks

More information

Basic Queueing Theory M/M/* Queues. Introduction

Basic Queueing Theory M/M/* Queues. Introduction Basc Queueng Theory M/M/* Queues These sldes are created by Dr. Yh Huang of George Mason Unversty. Students regstered n Dr. Huang's courses at GMU can ake a sngle achne-readable copy and prnt a sngle copy

More information

Multiple-Period Attribution: Residuals and Compounding

Multiple-Period Attribution: Residuals and Compounding Multple-Perod Attrbuton: Resduals and Compoundng Our revewer gave these authors full marks for dealng wth an ssue that performance measurers and vendors often regard as propretary nformaton. In 1994, Dens

More information

To manage leave, meeting institutional requirements and treating individual staff members fairly and consistently.

To manage leave, meeting institutional requirements and treating individual staff members fairly and consistently. Corporate Polces & Procedures Human Resources - Document CPP216 Leave Management Frst Produced: Current Verson: Past Revsons: Revew Cycle: Apples From: 09/09/09 26/10/12 09/09/09 3 years Immedately Authorsaton:

More information

PSYCHOLOGICAL RESEARCH (PYC 304-C) Lecture 12

PSYCHOLOGICAL RESEARCH (PYC 304-C) Lecture 12 14 The Ch-squared dstrbuton PSYCHOLOGICAL RESEARCH (PYC 304-C) Lecture 1 If a normal varable X, havng mean µ and varance σ, s standardsed, the new varable Z has a mean 0 and varance 1. When ths standardsed

More information

INTRODUCTION TO MERGERS AND ACQUISITIONS: FIRM DIVERSIFICATION

INTRODUCTION TO MERGERS AND ACQUISITIONS: FIRM DIVERSIFICATION XV. INTODUCTION TO MEGES AND ACQUISITIONS: FIM DIVESIFICATION In the ntroducton to Secton VII, t was noted that frs can acqure assets by ether undertakng nternally-generated new projects or by acqurng

More information

Inequality and The Accounting Period. Quentin Wodon and Shlomo Yitzhaki. World Bank and Hebrew University. September 2001.

Inequality and The Accounting Period. Quentin Wodon and Shlomo Yitzhaki. World Bank and Hebrew University. September 2001. Inequalty and The Accountng Perod Quentn Wodon and Shlomo Ytzha World Ban and Hebrew Unversty September Abstract Income nequalty typcally declnes wth the length of tme taen nto account for measurement.

More information

A Dual-Spiral Reengineering Model for Legacy System

A Dual-Spiral Reengineering Model for Legacy System A Dual-pral Reengneerng Model or Legacy yste Xaohu Yang Lu Chen Xnyu Wang College o Coputer cence and Technology Zheang Unversty Hangzhou Chna {yangxh bluelucy wangxnyu}@zu.edu.cn Abstract Coputer Technology

More information

An Evaluation of the Extended Logistic, Simple Logistic, and Gompertz Models for Forecasting Short Lifecycle Products and Services

An Evaluation of the Extended Logistic, Simple Logistic, and Gompertz Models for Forecasting Short Lifecycle Products and Services An Evaluaton of the Extended Logstc, Smple Logstc, and Gompertz Models for Forecastng Short Lfecycle Products and Servces Charles V. Trappey a,1, Hsn-yng Wu b a Professor (Management Scence), Natonal Chao

More information

Outline. CAPM: Introduction. The Capital Asset Pricing Model (CAPM) Professor Lasse H. Pedersen. Key questions: Answer: CAPM

Outline. CAPM: Introduction. The Capital Asset Pricing Model (CAPM) Professor Lasse H. Pedersen. Key questions: Answer: CAPM The Catal Asset Prcng odel (CAP) Proessor Lasse H. Pedersen Pro. Lasse H. Pedersen 1 Key questons: Outlne What s the equlbrum requred return, E(R), o a stock? What s the equlbrum rce o a stock? Whch ortolos

More information

PRIVATE SCHOOL CHOICE: THE EFFECTS OF RELIGIOUS AFFILIATION AND PARTICIPATION

PRIVATE SCHOOL CHOICE: THE EFFECTS OF RELIGIOUS AFFILIATION AND PARTICIPATION PRIVATE SCHOOL CHOICE: THE EFFECTS OF RELIIOUS AFFILIATION AND PARTICIPATION Danny Cohen-Zada Department of Economcs, Ben-uron Unversty, Beer-Sheva 84105, Israel Wllam Sander Department of Economcs, DePaul

More information

INVENTORY MANAGEMENT REVISED

INVENTORY MANAGEMENT REVISED Scence & Mltary 2/2011 INVENTORY MANAGEMENT REVISED Analyss of behavoral asects of decson makng wthn Sales & Oeratons Plannng rocess Peter JUREČKA Abstract: The urose of ths artcle s to extend the standard

More information

Applied Research Laboratory. Decision Theory and Receiver Design

Applied Research Laboratory. Decision Theory and Receiver Design Decson Theor and Recever Desgn Sgnal Detecton and Performance Estmaton Sgnal Processor Decde Sgnal s resent or Sgnal s not resent Nose Nose Sgnal? Problem: How should receved sgnals be rocessed n order

More information

Physics 100A Homework 8 Chapter 9

Physics 100A Homework 8 Chapter 9 Physcs 00A Hoework 8 Chater 9 9.4 Two ar-track carts oe toward one another on an ar track. Cart has a ass o 0.35 kg and a seed o. /s. Cart has a ass o 0.6 kg. A)What seed ust cart hae the total oentu o

More information

The OC Curve of Attribute Acceptance Plans

The OC Curve of Attribute Acceptance Plans The OC Curve of Attrbute Acceptance Plans The Operatng Characterstc (OC) curve descrbes the probablty of acceptng a lot as a functon of the lot s qualty. Fgure 1 shows a typcal OC Curve. 10 8 6 4 1 3 4

More information

Financial Mathemetics

Financial Mathemetics Fnancal Mathemetcs 15 Mathematcs Grade 12 Teacher Gude Fnancal Maths Seres Overvew In ths seres we am to show how Mathematcs can be used to support personal fnancal decsons. In ths seres we jon Tebogo,

More information

Trade Adjustment and Productivity in Large Crises. Online Appendix May 2013. Appendix A: Derivation of Equations for Productivity

Trade Adjustment and Productivity in Large Crises. Online Appendix May 2013. Appendix A: Derivation of Equations for Productivity Trade Adjustment Productvty n Large Crses Gta Gopnath Department of Economcs Harvard Unversty NBER Brent Neman Booth School of Busness Unversty of Chcago NBER Onlne Appendx May 2013 Appendx A: Dervaton

More information

1.1 The University may award Higher Doctorate degrees as specified from time-to-time in UPR AS11 1.

1.1 The University may award Higher Doctorate degrees as specified from time-to-time in UPR AS11 1. HIGHER DOCTORATE DEGREES SUMMARY OF PRINCIPAL CHANGES General changes None Secton 3.2 Refer to text (Amendments to verson 03.0, UPR AS02 are shown n talcs.) 1 INTRODUCTION 1.1 The Unversty may award Hgher

More information

Week 6 Market Failure due to Externalities

Week 6 Market Failure due to Externalities Week 6 Market Falure due to Externaltes 1. Externaltes n externalty exsts when the acton of one agent unavodably affects the welfare of another agent. The affected agent may be a consumer, gvng rse to

More information

Overview of monitoring and evaluation

Overview of monitoring and evaluation 540 Toolkt to Combat Traffckng n Persons Tool 10.1 Overvew of montorng and evaluaton Overvew Ths tool brefly descrbes both montorng and evaluaton, and the dstncton between the two. What s montorng? Montorng

More information

A Study on Secure Data Storage Strategy in Cloud Computing

A Study on Secure Data Storage Strategy in Cloud Computing Journal of Convergence Informaton Technology Volume 5, Number 7, Setember 00 A Study on Secure Data Storage Strategy n Cloud Comutng Danwe Chen, Yanjun He, Frst Author College of Comuter Technology, Nanjng

More information

Quality of Service Analysis and Control for Wireless Sensor Networks

Quality of Service Analysis and Control for Wireless Sensor Networks Qualty of ervce Analyss and Control for Wreless ensor Networs Jaes Kay and Jeff Frol Unversty of Veront ay@uv.edu, frol@eba.uv.edu Abstract hs paper nvestgates wreless sensor networ spatal resoluton as

More information

CAPITAL GAINS AND THE CAPITAL ASSET PRICING MODEL. WORKING PAPER SERIES Working Paper No. 1

CAPITAL GAINS AND THE CAPITAL ASSET PRICING MODEL. WORKING PAPER SERIES Working Paper No. 1 CAPITAL GAINS AN THE CAPITAL ASSET PRING MOEL WORKING PAPER SERIES Workng Paper No. 1 Martn Lally School of Econocs and nance aculty of Coerce and Adnstraton Vctora Unversty of Wellngton Tony van Zl School

More information

Addendum to: Importing Skill-Biased Technology

Addendum to: Importing Skill-Biased Technology Addendum to: Importng Skll-Based Technology Arel Bursten UCLA and NBER Javer Cravno UCLA August 202 Jonathan Vogel Columba and NBER Abstract Ths Addendum derves the results dscussed n secton 3.3 of our

More information

How Sets of Coherent Probabilities May Serve as Models for Degrees of Incoherence

How Sets of Coherent Probabilities May Serve as Models for Degrees of Incoherence 1 st Internatonal Symposum on Imprecse Probabltes and Ther Applcatons, Ghent, Belgum, 29 June 2 July 1999 How Sets of Coherent Probabltes May Serve as Models for Degrees of Incoherence Mar J. Schervsh

More information

ADOPTION OF BIG DATA ANALYTICS IN HEALTHCARE: THE EFFICIENCY AND PRIVACY

ADOPTION OF BIG DATA ANALYTICS IN HEALTHCARE: THE EFFICIENCY AND PRIVACY ADOPTION OF BIG DATA ANALYTICS IN HEALTHCARE: THE EFFICIENCY AND PRIVACY He L, School of Economc Informaton Engneerng, Southwestern Unversty of Fnance and Economcs, Chengdu, Chna, olverlhe@gmalcom Jng

More information

Section 5.4 Annuities, Present Value, and Amortization

Section 5.4 Annuities, Present Value, and Amortization Secton 5.4 Annutes, Present Value, and Amortzaton Present Value In Secton 5.2, we saw that the present value of A dollars at nterest rate per perod for n perods s the amount that must be deposted today

More information

A Prediction System Based on Fuzzy Logic

A Prediction System Based on Fuzzy Logic Proceedngs of the World Congress on Engneerng and Comuter Scence 2008 WCECS 2008, October 22-24, 2008, San Francsco, USA A Predcton System Based on Fuzzy Logc Vadeh.V,Monca.S, Mohamed Shek Safeer.S, Deeka.M

More information

Problem Set 3. a) We are asked how people will react, if the interest rate i on bonds is negative.

Problem Set 3. a) We are asked how people will react, if the interest rate i on bonds is negative. Queston roblem Set 3 a) We are asked how people wll react, f the nterest rate on bonds s negatve. When

More information

What s the Difference?! Gender, Personality, and the Propensity to Start a Business

What s the Difference?! Gender, Personality, and the Propensity to Start a Business DISCUSSIO PAPER SERIES IA DP o. 4778 hat s the Derence?! Gender, Personalty, and the Propensty to Start a Busness Marna Furdas Karsten Kohn February 2010 Forschungsnsttut zur ukunt der Arbet Insttute or

More information

Technical Report, SFB 475: Komplexitätsreduktion in Multivariaten Datenstrukturen, Universität Dortmund, No. 1998,04

Technical Report, SFB 475: Komplexitätsreduktion in Multivariaten Datenstrukturen, Universität Dortmund, No. 1998,04 econstor www.econstor.eu Der Open-Access-Publkatonsserver der ZBW Lebnz-Inforatonszentru Wrtschaft The Open Access Publcaton Server of the ZBW Lebnz Inforaton Centre for Econocs Becka, Mchael Workng Paper

More information

1. Measuring association using correlation and regression

1. Measuring association using correlation and regression How to measure assocaton I: Correlaton. 1. Measurng assocaton usng correlaton and regresson We often would lke to know how one varable, such as a mother's weght, s related to another varable, such as a

More information

JCM_VN_AM003_ver01.0 Sectoral scope: 03

JCM_VN_AM003_ver01.0 Sectoral scope: 03 Sectoral scoe: 03 Jont Credtng Mechansm Aroved Methodology VN_AM003 Imrovng the energy effcency of commercal buldngs by utlzaton of hgh effcency equment A. Ttle of the methodology Imrovng the energy effcency

More information

A Statistical Model for Detecting Abnormality in Static-Priority Scheduling Networks with Differentiated Services

A Statistical Model for Detecting Abnormality in Static-Priority Scheduling Networks with Differentiated Services A Statstcal odel for Detectng Abnoralty n Statc-Prorty Schedulng Networks wth Dfferentated Servces ng L 1 and We Zhao 1 School of Inforaton Scence & Technology, East Chna Noral Unversty, Shangha 0006,

More information

ANALYZING THE RELATIONSHIPS BETWEEN QUALITY, TIME, AND COST IN PROJECT MANAGEMENT DECISION MAKING

ANALYZING THE RELATIONSHIPS BETWEEN QUALITY, TIME, AND COST IN PROJECT MANAGEMENT DECISION MAKING ANALYZING THE RELATIONSHIPS BETWEEN QUALITY, TIME, AND COST IN PROJECT MANAGEMENT DECISION MAKING Matthew J. Lberatore, Department of Management and Operatons, Vllanova Unversty, Vllanova, PA 19085, 610-519-4390,

More information

II. THE QUALITY AND REGULATION OF THE DISTRIBUTION COMPANIES I. INTRODUCTION

II. THE QUALITY AND REGULATION OF THE DISTRIBUTION COMPANIES I. INTRODUCTION Fronter Methodology to fx Qualty goals n Electrcal Energy Dstrbuton Copanes R. Rarez 1, A. Sudrà 2, A. Super 3, J.Bergas 4, R.Vllafáfla 5 1-2 -3-4-5 - CITCEA - UPC UPC., Unversdad Poltécnca de Cataluña,

More information

Sorting Online Reviews by Usefulness Based on the VIKOR Method

Sorting Online Reviews by Usefulness Based on the VIKOR Method Assocaton or Inormaton Systems AIS Electronc Lbrary (AISeL) Eleventh Wuhan Internatonal Conerence on e- Busness Wuhan Internatonal Conerence on e-busness 5-26-2012 Sortng Onlne Revews by Useulness Based

More information

Maximizing profit using recommender systems

Maximizing profit using recommender systems Maxzng proft usng recoender systes Aparna Das Brown Unversty rovdence, RI aparna@cs.brown.edu Clare Matheu Brown Unversty rovdence, RI clare@cs.brown.edu Danel Rcketts Brown Unversty rovdence, RI danel.bore.rcketts@gal.co

More information

Structural Estimation of Variety Gains from Trade Integration in a Heterogeneous Firms Framework

Structural Estimation of Variety Gains from Trade Integration in a Heterogeneous Firms Framework Journal of Economcs and Econometrcs Vol. 55, No.2, 202 pp. 78-93 SSN 2032-9652 E-SSN 2032-9660 Structural Estmaton of Varety Gans from Trade ntegraton n a Heterogeneous Frms Framework VCTOR RVAS ABSTRACT

More information

A Hybrid Approach to Evaluate the Performance of Engineering Schools

A Hybrid Approach to Evaluate the Performance of Engineering Schools A Hybrd Approach to Evaluate the Perforance of Engneerng Schools School of Engneerng Unversty of Brdgeport Brdgeport, CT 06604 ABSTRACT Scence and engneerng (S&E) are two dscplnes that are hghly receptve

More information

BERNSTEIN POLYNOMIALS

BERNSTEIN POLYNOMIALS On-Lne Geometrc Modelng Notes BERNSTEIN POLYNOMIALS Kenneth I. Joy Vsualzaton and Graphcs Research Group Department of Computer Scence Unversty of Calforna, Davs Overvew Polynomals are ncredbly useful

More information

Project Networks With Mixed-Time Constraints

Project Networks With Mixed-Time Constraints Project Networs Wth Mxed-Tme Constrants L Caccetta and B Wattananon Western Australan Centre of Excellence n Industral Optmsaton (WACEIO) Curtn Unversty of Technology GPO Box U1987 Perth Western Australa

More information

A New Technique for Vehicle Tracking on the Assumption of Stratospheric Platforms. Department of Civil Engineering, University of Tokyo **

A New Technique for Vehicle Tracking on the Assumption of Stratospheric Platforms. Department of Civil Engineering, University of Tokyo ** Fuse, Taash A New Technque for Vehcle Tracng on the Assumton of Stratosherc Platforms Taash FUSE * and Ehan SHIMIZU ** * Deartment of Cvl Engneerng, Unversty of Toyo ** Professor, Deartment of Cvl Engneerng,

More information

Support Vector Machines

Support Vector Machines Support Vector Machnes Max Wellng Department of Computer Scence Unversty of Toronto 10 Kng s College Road Toronto, M5S 3G5 Canada wellng@cs.toronto.edu Abstract Ths s a note to explan support vector machnes.

More information

Ethnic Chinese Networking in Cross-border Investment: The Impact of Economic and Institutional Development. Abstract:

Ethnic Chinese Networking in Cross-border Investment: The Impact of Economic and Institutional Development. Abstract: Ethnc Chnese Networkng n Cross-border Investment: The Impact of Economc and Insttutonal Development Sarah Y. Tong * Hong Kong Insttute of Economcs and Busness Strateges The Unversty of Hong Kong Aprl 2003

More information

Analysis and Modeling of Buck Converter in Discontinuous-Output-Inductor-Current Mode Operation *

Analysis and Modeling of Buck Converter in Discontinuous-Output-Inductor-Current Mode Operation * Energy and Power Engneerng, 3, 5, 85-856 do:.436/ee.3.54b63 Publshed Onlne July 3 (htt://www.scr.org/journal/ee) Analyss and Modelng of Buck Converter n Dscontnuous-Outut-Inductor-Current Mode Oeraton

More information

THE DISTRIBUTION OF LOAN PORTFOLIO VALUE * Oldrich Alfons Vasicek

THE DISTRIBUTION OF LOAN PORTFOLIO VALUE * Oldrich Alfons Vasicek HE DISRIBUION OF LOAN PORFOLIO VALUE * Oldrch Alfons Vascek he amount of captal necessary to support a portfolo of debt securtes depends on the probablty dstrbuton of the portfolo loss. Consder a portfolo

More information

In our example i = r/12 =.0825/12 At the end of the first month after your payment is received your amount owed is. P (1 + i) A

In our example i = r/12 =.0825/12 At the end of the first month after your payment is received your amount owed is. P (1 + i) A Amortzed loans: Suppose you borrow P dollars, e.g., P = 100, 000 for a house wth a 30 year mortgage wth an nterest rate of 8.25% (compounded monthly). In ths type of loan you make equal payments of A dollars

More information

Payment Cards and Cash.

Payment Cards and Cash. Interchange Fees and Ine cences n the Substtuton between Payment Cards and Cash. Maranne Verder June 7, 2010 Abstract Ths artcle exlans why the collectve determnaton of nterchange fees n ayment latforms

More information

Chapter 15: Debt and Taxes

Chapter 15: Debt and Taxes Chapter 15: Debt and Taxes-1 Chapter 15: Debt and Taxes I. Basc Ideas 1. Corporate Taxes => nterest expense s tax deductble => as debt ncreases, corporate taxes fall => ncentve to fund the frm wth debt

More information

SIMPLE LINEAR CORRELATION

SIMPLE LINEAR CORRELATION SIMPLE LINEAR CORRELATION Smple lnear correlaton s a measure of the degree to whch two varables vary together, or a measure of the ntensty of the assocaton between two varables. Correlaton often s abused.

More information

Working Paper Testing weak cross-sectional dependence in large panels. CESifo working paper: Empirical and Theoretical Methods, No.

Working Paper Testing weak cross-sectional dependence in large panels. CESifo working paper: Empirical and Theoretical Methods, No. econstor www.econstor.eu Der Oen-Access-Publkatonsserver der ZBW Lebnz-Informatonszentrum Wrtschaft he Oen Access Publcaton Server of the ZBW Lebnz Informaton Centre for Economcs Pesaran, M. Hashem Workng

More information

Chapter 11 Practice Problems Answers

Chapter 11 Practice Problems Answers Chapter 11 Practce Problems Answers 1. Would you be more wllng to lend to a frend f she put all of her lfe savngs nto her busness than you would f she had not done so? Why? Ths problem s ntended to make

More information

Underwriting Risk. Glenn Meyers. Insurance Services Office, Inc.

Underwriting Risk. Glenn Meyers. Insurance Services Office, Inc. Underwrtng Rsk By Glenn Meyers Insurance Servces Offce, Inc. Abstract In a compettve nsurance market, nsurers have lmted nfluence on the premum charged for an nsurance contract. hey must decde whether

More information

Using Series to Analyze Financial Situations: Present Value

Using Series to Analyze Financial Situations: Present Value 2.8 Usng Seres to Analyze Fnancal Stuatons: Present Value In the prevous secton, you learned how to calculate the amount, or future value, of an ordnary smple annuty. The amount s the sum of the accumulated

More information

Marginal Returns to Education For Teachers

Marginal Returns to Education For Teachers The Onlne Journal of New Horzons n Educaton Volume 4, Issue 3 MargnalReturnstoEducatonForTeachers RamleeIsmal,MarnahAwang ABSTRACT FacultyofManagementand Economcs UnverstPenddkanSultan Idrs ramlee@fpe.ups.edu.my

More information

Faraday's Law of Induction

Faraday's Law of Induction Introducton Faraday's Law o Inducton In ths lab, you wll study Faraday's Law o nducton usng a wand wth col whch swngs through a magnetc eld. You wll also examne converson o mechanc energy nto electrc energy

More information

7.5. Present Value of an Annuity. Investigate

7.5. Present Value of an Annuity. Investigate 7.5 Present Value of an Annuty Owen and Anna are approachng retrement and are puttng ther fnances n order. They have worked hard and nvested ther earnngs so that they now have a large amount of money on

More information

Two-Phase Traceback of DDoS Attacks with Overlay Network

Two-Phase Traceback of DDoS Attacks with Overlay Network 4th Internatonal Conference on Sensors, Measureent and Intellgent Materals (ICSMIM 205) Two-Phase Traceback of DDoS Attacks wth Overlay Network Zahong Zhou, a, Jang Wang2, b and X Chen3, c -2 School of

More information

21 Vectors: The Cross Product & Torque

21 Vectors: The Cross Product & Torque 21 Vectors: The Cross Product & Torque Do not use our left hand when applng ether the rght-hand rule for the cross product of two vectors dscussed n ths chapter or the rght-hand rule for somethng curl

More information

Forecasting the Direction and Strength of Stock Market Movement

Forecasting the Direction and Strength of Stock Market Movement Forecastng the Drecton and Strength of Stock Market Movement Jngwe Chen Mng Chen Nan Ye cjngwe@stanford.edu mchen5@stanford.edu nanye@stanford.edu Abstract - Stock market s one of the most complcated systems

More information

A Novel Methodology of Working Capital Management for Large. Public Constructions by Using Fuzzy S-curve Regression

A Novel Methodology of Working Capital Management for Large. Public Constructions by Using Fuzzy S-curve Regression Novel Methodology of Workng Captal Management for Large Publc Constructons by Usng Fuzzy S-curve Regresson Cheng-Wu Chen, Morrs H. L. Wang and Tng-Ya Hseh Department of Cvl Engneerng, Natonal Central Unversty,

More information

Nordea G10 Alpha Carry Index

Nordea G10 Alpha Carry Index Nordea G10 Alpha Carry Index Index Rules v1.1 Verson as of 10/10/2013 1 (6) Page 1 Index Descrpton The G10 Alpha Carry Index, the Index, follows the development of a rule based strategy whch nvests and

More information

An Empirical Study of Search Engine Advertising Effectiveness

An Empirical Study of Search Engine Advertising Effectiveness An Emprcal Study of Search Engne Advertsng Effectveness Sanjog Msra, Smon School of Busness Unversty of Rochester Edeal Pnker, Smon School of Busness Unversty of Rochester Alan Rmm-Kaufman, Rmm-Kaufman

More information

Recurrence. 1 Definitions and main statements

Recurrence. 1 Definitions and main statements Recurrence 1 Defntons and man statements Let X n, n = 0, 1, 2,... be a MC wth the state space S = (1, 2,...), transton probabltes p j = P {X n+1 = j X n = }, and the transton matrx P = (p j ),j S def.

More information

1. Math 210 Finite Mathematics

1. Math 210 Finite Mathematics 1. ath 210 Fnte athematcs Chapter 5.2 and 5.3 Annutes ortgages Amortzaton Professor Rchard Blecksmth Dept. of athematcal Scences Northern Illnos Unversty ath 210 Webste: http://math.nu.edu/courses/math210

More information

Capacity-building and training

Capacity-building and training 92 Toolkt to Combat Traffckng n Persons Tool 2.14 Capacty-buldng and tranng Overvew Ths tool provdes references to tranng programmes and materals. For more tranng materals, refer also to Tool 9.18. Capacty-buldng

More information

FIW Working Paper N 104 March 2013. Country-specific determinants of horizontal and vertical intra-industry agri-food trade of the Visegrad Countries

FIW Working Paper N 104 March 2013. Country-specific determinants of horizontal and vertical intra-industry agri-food trade of the Visegrad Countries FIW Worng Paer FIW Worng Paer N 104 March 2013 Country-secfc determnants of horzontal and vertcal ntra-ndustry agr-food trade of the Vsegrad Countres Attla JAMBOR 1 Abstract The artcle analyses atterns

More information

The Choice of Direct Dealing or Electronic Brokerage in Foreign Exchange Trading

The Choice of Direct Dealing or Electronic Brokerage in Foreign Exchange Trading The Choce of Drect Dealng or Electronc Brokerage n Foregn Exchange Tradng Mchael Melvn Arzona State Unversty & Ln Wen Unversty of Redlands MARKET PARTICIPANTS: Customers End-users Multnatonal frms Central

More information

Transformation of Commercial Flows into Physical Flows of Electricity

Transformation of Commercial Flows into Physical Flows of Electricity Transforaton of Coercal Flows nto Physcal Flows of Electrcty Marek ADAMEC, Mchaela INDRAKOVA, Pavel PAVLATKA Dept. of Econocs, Manageent and Huantes, Czech Techncal Unversty, Zkova 4, 166 27 Praha, Czech

More information

x f(x) 1 0.25 1 0.75 x 1 0 1 1 0.04 0.01 0.20 1 0.12 0.03 0.60

x f(x) 1 0.25 1 0.75 x 1 0 1 1 0.04 0.01 0.20 1 0.12 0.03 0.60 BIVARIATE DISTRIBUTIONS Let be a varable that assumes the values { 1,,..., n }. Then, a functon that epresses the relatve frequenc of these values s called a unvarate frequenc functon. It must be true

More information

CEIOPS-DOC-42/09. (former CP 49) October 2009

CEIOPS-DOC-42/09. (former CP 49) October 2009 CEIOPS-DOC-42/09 CEIOPS Advce for Level 2 Imlementng Measures on Solvency II: Standard formula SCR - Artcle 109 c Lfe underwrtng rsk (former CP 49) October 2009 CEIOPS e.v. Westhafenlatz 1-60327 Frankfurt

More information

EXAMPLE PROBLEMS SOLVED USING THE SHARP EL-733A CALCULATOR

EXAMPLE PROBLEMS SOLVED USING THE SHARP EL-733A CALCULATOR EXAMPLE PROBLEMS SOLVED USING THE SHARP EL-733A CALCULATOR 8S CHAPTER 8 EXAMPLES EXAMPLE 8.4A THE INVESTMENT NEEDED TO REACH A PARTICULAR FUTURE VALUE What amount must you nvest now at 4% compoune monthly

More information

The Analysis of Outliers in Statistical Data

The Analysis of Outliers in Statistical Data THALES Project No. xxxx The Analyss of Outlers n Statstcal Data Research Team Chrysses Caron, Assocate Professor (P.I.) Vaslk Karot, Doctoral canddate Polychrons Economou, Chrstna Perrakou, Postgraduate

More information

SUPPLIER FINANCING AND STOCK MANAGEMENT. A JOINT VIEW.

SUPPLIER FINANCING AND STOCK MANAGEMENT. A JOINT VIEW. SUPPLIER FINANCING AND STOCK MANAGEMENT. A JOINT VIEW. Lucía Isabel García Cebrán Departamento de Economía y Dreccón de Empresas Unversdad de Zaragoza Gran Vía, 2 50.005 Zaragoza (Span) Phone: 976-76-10-00

More information

The Economic Impacts of Cigarette Tax Reductions on Youth Smoking in Canada

The Economic Impacts of Cigarette Tax Reductions on Youth Smoking in Canada The Economc Impacts of Cgarette Tax Reductons on Youth Smokng n Canada Dane P. Dupont and Anthony J. Ward Economcs, Brock Unversty December 2002 Abstract Cgarettes are the most commonly consumed recreatonal

More information

VRT012 User s guide V0.1. Address: Žirmūnų g. 27, Vilnius LT-09105, Phone: (370-5) 2127472, Fax: (370-5) 276 1380, Email: info@teltonika.

VRT012 User s guide V0.1. Address: Žirmūnų g. 27, Vilnius LT-09105, Phone: (370-5) 2127472, Fax: (370-5) 276 1380, Email: info@teltonika. VRT012 User s gude V0.1 Thank you for purchasng our product. We hope ths user-frendly devce wll be helpful n realsng your deas and brngng comfort to your lfe. Please take few mnutes to read ths manual

More information

The Choice of Direct Dealing or Electronic Brokerage in Foreign Exchange Trading

The Choice of Direct Dealing or Electronic Brokerage in Foreign Exchange Trading The Choce of Drect Dealng or Electronc Brokerage n Foregn Exchange Tradng Mchael Melvn & Ln Wen Arzona State Unversty Introducton Electronc Brokerage n Foregn Exchange Start from a base of zero n 1992

More information

CHAPTER 14 MORE ABOUT REGRESSION

CHAPTER 14 MORE ABOUT REGRESSION CHAPTER 14 MORE ABOUT REGRESSION We learned n Chapter 5 that often a straght lne descrbes the pattern of a relatonshp between two quanttatve varables. For nstance, n Example 5.1 we explored the relatonshp

More information

Staff Paper. Farm Savings Accounts: Examining Income Variability, Eligibility, and Benefits. Brent Gloy, Eddy LaDue, and Charles Cuykendall

Staff Paper. Farm Savings Accounts: Examining Income Variability, Eligibility, and Benefits. Brent Gloy, Eddy LaDue, and Charles Cuykendall SP 2005-02 August 2005 Staff Paper Department of Appled Economcs and Management Cornell Unversty, Ithaca, New York 14853-7801 USA Farm Savngs Accounts: Examnng Income Varablty, Elgblty, and Benefts Brent

More information

Depreciation of Business R&D Capital

Depreciation of Business R&D Capital Deprecaton of Busness R&D Captal U.S. Bureau of Economc Analyss Abstract R&D deprecaton rates are crtcal to calculatng the rates of return to R&D nvestments and captal servce costs, whch are mportant for

More information

benefit is 2, paid if the policyholder dies within the year, and probability of death within the year is ).

benefit is 2, paid if the policyholder dies within the year, and probability of death within the year is ). REVIEW OF RISK MANAGEMENT CONCEPTS LOSS DISTRIBUTIONS AND INSURANCE Loss and nsurance: When someone s subject to the rsk of ncurrng a fnancal loss, the loss s generally modeled usng a random varable or

More information

The Development of Web Log Mining Based on Improve-K-Means Clustering Analysis

The Development of Web Log Mining Based on Improve-K-Means Clustering Analysis The Development of Web Log Mnng Based on Improve-K-Means Clusterng Analyss TngZhong Wang * College of Informaton Technology, Luoyang Normal Unversty, Luoyang, 471022, Chna wangtngzhong2@sna.cn Abstract.

More information

Fixed income risk attribution

Fixed income risk attribution 5 Fxed ncome rsk attrbuton Chthra Krshnamurth RskMetrcs Group chthra.krshnamurth@rskmetrcs.com We compare the rsk of the actve portfolo wth that of the benchmark and segment the dfference between the two

More information