Product imitation and policies of a developing country
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The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).
History
The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.
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1898–present
Historical Names
- Department of Economic Science (1898–1910)
- Department of Economics and Political Science (1910-1913)
- Department of Applied Economics and Social Science (1913–1924)
- Department of Economics, History and Sociology (1924–1931)
- Department of Economics and Sociology (1931–1967)
Related Units
- College of Agricultural and Life Sciences (parent college)
- College of Liberal Arts and Sciences (parent college)
- College of Business (parent college)
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Abstract
The first chapter sets up the basic model of North-South trade. North innovates new variety of products and South imitates the old varieties that previously innovated and produced in the North. South has to invest R&D labor, which reduces the southern production cost to be able to compete in the market. The second chapter considers two industrial policies of South, R&D subsidy and entry subsidy to imitators. The effects of the subsidy depend on the unit cost gap between the North and the South. If the cost gap turned out to be narrow, zero R&D subsidy with a small subsidy to entry can raise the welfare of the southern consumers. If the cost gap is wide so that the southern firms can charge the optimal unconstrained monopoly price that, given demand assumptions, is a fixed mark up over the unit cost, the optimal R&D subsidy is positive. This subsidy raises the consumption of imitation varieties but reduces the number of the varieties. The last chapter is an empirical study that investigates the role of exchange rate on the trade flows. The bilateral data between U.S. and Canada are disaggregated into five "end-use" categories. Co-integration among the trade flow of each category, its relative price and the relative income of the two countries is tested to see if those variables maintained any long-run equilibrium relationship. Also short-run dynamics are checked through error correction model to measure how much the real exchange rates or the relative prices influence the trade flows.