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FEC Articles Express: Special Issue on International Trade in Honor of Richard A. Brecher (2018 March Issue)
March 23, 2018

Frontiers of Economics in China (FEC)

Special Issue on International Trade in Honor of Richard A. Brecher

Volume 13, Issue 1, March 2018

(Free Full-Text Download)


Zhiqi Chen

Introduction to the Special Issue in Honor of Richard A. Brecher

Alan V. Deardorff

Local Import Competition in a Lumpy Country


John Douglas Wilson, Ilkay Yilmaz

Free-Trade Agreements in a Model of Trade, Migration and Politics


Ngo Van Long, Maxwell Tuuliy

Offshoring and Reshoring: The Roles of Incomplete Contracts and Relative Bargaining Power


Tatsuo Hatta

Revenue-Constrained Combination of an Optimal Tariff and Duty Drawback


Sven W. Arndt

Global Value Chains, Horizontal Intra-Industry Trade and the Heterogeneous Firm

Henry Y. Wan Jr.

Involuntary Unemployment: An Expository Note

Zhiqi Chen, Marcel C. Voia

Short-Term and Long-Term Margins of International Trade: Evidence from the Canada-Chile Free Trade Agreement


Churen Sun, Zhihao Yu, Tao Zhang

Agglomeration and Firm Export




Local Import Competition in a Lumpy Country

Alan V. Deardorff

Ford School of Public Policy, University of Michigan


Abstract: This paper examines the effects of a fall in the price of an imported good in a region of a country that is specialized in producing that good. The context is a “lumpy country” model in which factors are unable to move between locations, although in this case I assume that only labor is immobile, and that the other factor, capital, is perfectly mobile between regions. With mobile capital, the lumpy-country equilibrium can be anywhere in the factor-price equalization set, but my focus is on a region that initially produces only one good, on the border of that set. When the price of that good falls due to import competition, it would be possible for both factors to reallocate partially into production of the other good, but I assume instead that some capital simply leaves the region, so that it continues to produce only the same good that it did before. The result of this is a fall in the real wage of labor, just as under Stolper-Samuelson assumptions. I then look at production also of a non-traded good, and find that the same import competition that cheapened the traded good also cheapens the nontraded good. The result is that the region shrinks, losing capital and producing less of both goods unless the substitution in favor of the nontraded good expands its consumption out of a smaller income.


Free-Trade Agreements in a Model of Trade, Migration and Politics

John Douglas Wilson

Department of Economics, Michigan State University

Ilkay Yilmaz

Department of Economics, Mersin University


Abstract: This paper uses a probabilistic voting model to investigate voting for a free-trade agreement between a labor-abundant country and a capital-abundant country. Migration from the labor-abundant country to the capital-abundant country increases the probability of a free-trade agreement, with lower migration costs leading to more migration and a higher free-trade probability. On the other hand, if a lower probability of free trade is caused by an increased voter bias against free-trade candidates, then there is less migration. A dynamic extension of the model is also investigated.




Offshoring and Reshoring:

The Roles of Incomplete Contracts and Relative Bargaining Power

Ngo Van Long

McGill University

Maxwell Tuuliy

University of Victoria


Abstract: This paper demonstrates that an increase in bargaining power of Northern firms relative to that of their Southern contractors can trigger reshoring if the North South wage differential is moderate, such that only industries with a high share of unskilled labor find outsourcing profitable. However, such an increase in Northern bargaining power can increase offshoring if the wage differential is so high that even industries with a low share of unskilled labor also offshore.



Revenue-Constrained Combination of an Optimal Tariff and Duty Drawback

Tatsuo Hatta

Asian Growth Research Institute


Abstract: A duty drawback is an export subsidy determined as a percentage of the tariffs paid on the imported inputs used in its production. This paper examines the revenue-constrained optimal tariff structure in a small open economy including a duty drawback as a trade policy tool. This paper has two main aims. First, we show that the revenue-constrained optimal combination of tariff and duty drawback for a given revenue level is not unique. Second, we show that if the optimal import tariff rates are all positive when the duty drawback rate is zero, then the optimal import tariff rates are always positive when the duty drawback is positive.


Related Articles:


Understanding China’s Foreign Trade Policy: A Literature Review 

Tan Li, Larry Qiu, Ying Xue


Trade Restrictiveness and Deadweight Loss in China’s Imports 

Bo Chen, Hong Ma



Agglomeration and Firm Export

Churen Sun

Department of Economics, Southwest University of Finance and Economics

Zhihao Yu

Department of Economics, Carleton University

Tao Zhang

International Business School, Shanghai University of International

Business and Economics


Abstract: Using Chinese manufacturing data between 1998 and 2007, this paper investigates the impact of agglomeration on firm’s export behavior. It is found that the agglomeration of manufacturing industries in China over this period increases firm’s export probability as well as its export volume, and the impact is larger for more efficient firms. However, the impact on firm’s export volume depends on the degree of agglomeration. When the degree of agglomeration is low, an increase in agglomeration would expand firm’s export volume but the impact will be diminishing and even turns negative if the degree of agglomeration is already very high.



Journal Profile

Frontiers of Economics in China (FEC) is a quarterly peer-reviewed journal edited by Institute for Advanced Research, Shanghai University of Finance and Economics, and published by Higher Education Press.  Established in 2006 and with Guoqiang Tian as the Editor, the journal has a strong Editorial Advisory Board (with several Nobel Prize winners as board members), as well as a dedicated Co-Editors’ team and an Editorial Board comprised of leading overseas and domestic Chinese economists.

Issued quarterly and distributed worldwide, the FEC is available both online and in hard-copy.  With more than 600 institutional subscribers worldwide and indexed in more than 10 databases including ESCI, EconLit, RePEc and SCOPUS, the journal was ranked as one of “The Highest International Impact Academic Journals of China” in 2016.

The FEC welcomes submissions of theoretical and empirical papers from all fields of economics, particularly those with an emphasis on the Chinese economy and other emerging, developing or transition economies.  While the journal is primarily interested in original research papers, it also welcomes submissions of opinion articles, literature surveys, and book reviews.  Full-text papers are free for download at:


Editor: Guoqiang Tian, Texas A&M University; Shanghai University of Finance and Economics

Executive Editor: Zhiqi Chen, Carleton University


Chunrong Ai, University of Florida

Kevin X.D. Huang, Vanderbilt University

Neng Wang, Columbia University

James Wen, Trinity College, USA


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