Dynamic Externalities and Policy Coordination
Manjira Datta and
Working Papers from Department of Economics, W. P. Carey School of Business, Arizona State University
We introduce the possibility of trade in dynamic models with externalities and evaluate the consequences on the capital accumulation process, the market-clearing prices and policy making. We consider mixed economies characterized by a blend of strategic and nonstrategic sectors. An equilibrium exists in the bilateral monopoly game because the strategic planner incorporates the future utility of the country and the presence of a nonstrategic sector in its decision making. Capital externality is one source of interdependence. Equilibrium price, a function of both outputs, is another. Policy coordination is advantageous only when preferences are dissimilar and an externality is present.
JEL-codes: C73 D90 E61 (search for similar items in EconPapers)
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Journal Article: Dynamic Externalities and Policy Coordination (2000)
Working Paper: Dynamic Externalities and Policy Coordination
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Persistent link: https://EconPapers.repec.org/RePEc:asu:wpaper:2132841
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