Month: June 2020

IMPACT OF AUTO INDUSTRY AND ITS SPATIAL SPILLOVER EFFECT ON ALABAMA’S ECONOMIC GROWTH AND DEVELOPMENT

Sooriyakumar Krishnapillai

Department of Agricultural Economics and Rural sociology, Auburn University, Auburn, U.S.A & Department of Agricultural Economics,University of Jaffna, Sri Lanka

kzs0008@tigermail.auburn.edu

Henry Kinnucan

Department of Agricultural Economics and Rural sociology, 213 Comer Hall, Auburn University, Auburn, AL 36849, U.S.A

kinnuhw@auburn.edu

Abstract

This paper studies the effect of automobile production on Alabama’s economy. A spatial panel simultaneous equations model was developed using county data.  The empirical findings suggest that automobile production increase the employment growth and per capita income growth of the counties which are closer to the automobile plant while other things equal, but reduce the population growth with closer distance to the automobile plant while other things equal. This may be due to the competition between automotive suppliers clustered around the automobile plant and real estate builders for land and other infrastructure facilities. This study also finds that jobs follow people and also people follow jobs.  The existence of spatial lag indicates that growth of population; employment and per capita income are not only dependent on the characteristics of that county, but also on those of its neighbors.  These interdependences provide the need of economic development policy coordination among the counties.

Keywords: Spatial effect, Automobile production, Spatial panel simultaneous equations model, Generalized Spatial Three-Stage Least Squares

JEL classification: R300, O120, O150

read more

INVESTIGATING THE QUALITY OF PRODUCTS OF DIFFERENTIATED TRADEMARK PRODUCERS (GAME THEORY APPROACH)

Naeimeh HOZOURI

PhD student of Economics,Urmia University

n.hozouri@yahoo.com

Kiumars SHAHBAZI

Professor of Economics, Urmia University

k.shahbazi@urmia.ac.ir

Abstract

Quality, as one aspect of product differentiation, is the main factor in survival and sustainability of producing firms. In this paper, two main producing firms are considered, one being the main producing firm offering high quality trademarks and the other producing low quality trademarks. Then, the game is designed for these two firms, the implications of this game are referred to, and the strategies for producers of high-quality and low-quality trademarks in terms of equilibrium price, quality, and profit are discussed. The results indicate that by increasing the production costs of each producer lead the producer of high quality trademarks to increase their quality. In addition, an increase in production costs for a low quality producer lead them to reduce their quality; however, an increase in production costs for a high quality producer leads the producer of low quality trademarks to increase their quality. Finally, the relationship between the profits of a high quality producer is directly related to the quality of its own trademark and inversely related to the low quality trademark.

Keywords: Quality, Vertical differentiation, Market entrance, Game theory

JEL classification: L15, L22, L42, C73

read more

AGGLOMERATION ECONOMICS AND ASYMMETRIC INFORMATION: ROLE OF INSTITUTIONS

Vinko MUŠTRA[1]

Associate professor, Faculty of Economics, Business and Tourism, University of Split

vmustra@efst.hr

Hrvoje KALINIĆ

Assistant professor, Faculty of Science, University of Split

hrvoje.kalinic@pmfst.hr

Abstract

This paper constructs the model that links agglomeration economics with information asymmetries. It extends the literature by launching the concept that explains influence of the asymmetric information on agglomeration economies by emphasizing the role of the transaction cost under institutional framework. Consequently, the predictions of the model suggesting that impact of agglomeration economies depends on stages of development highlight the importance of different approach to the agglomeration economies phenomena in developing  and developed countries.

Keywords: agglomeration economics, asymmetric information, transaction costs, institutions

JEL classification: R1, O4, D8

read more

[1] Corresponding author