Dynamic externalities and policy coordination

Manjira Datta, Leonard J. Mirman

Research output: Contribution to journalArticle

6 Scopus citations

Abstract

The paper introduces trade into dynamic models with externalities and capital accumulation, and evaluates the efficiency of the Cournot-Nash equilibrium. It considers mixed economies characterized by a blend of strategic and nonstrategic sectors. Also, there are two sources of interdependence: the existence of production externalities and the endogenous determination of market prices. It is shown that policy coordination is not needed when preferences are the same. In this case, the production externalities are internalized, so that an inefficient solution becomes the efficient integrated world equilibrium due to trade.

Original languageEnglish (US)
Pages (from-to)44-59
Number of pages16
JournalReview of International Economics
Volume8
Issue number1
DOIs
StatePublished - Feb 2000

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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