The visible hand of government: Creating markets, tax competition and regulating retail financial products.

摘要

Chapter one introduces the thesis and discusses the changing economic role of government. Chapter two assesses the efficiency of the supply function mechanism used in wholesale electricity markets. It presents a specific model of symmetric duopoly with two types of predictable and substitute demands. Equilibrium is characterised. Prices are not as high as implied in the literature, which assumes that demands are not predictable. Chapter three analyses the effect of asymmetries between countries on environmental taxes where trade is liberalised, pollution is local, capital moves freely, governments and firms behave strategically and product markets are integrated after trade liberalisation. Following trade liberalisation, non-cooperative environmental policy must address two externalities: a competition externality and a trade externality. However, setting environmental policy cooperatively eliminates the trade externality. Entry is more likely when countries are different and would be associated, for example, with the exporting country. Chapter four relaxes the assumption of fixed wages. Labour is immobile, there are no imperfections in labour markets, and labour supply is linear. Wages remain different after trade liberalisation. They are higher, for example, in the country with a lower valuation of environmental damage. Chapter five introduces an additional perspective for retail financial products and their regulation based on consumers' ignorance about their needs. This complements the standard perspective based on information asymmetries. Consumers have different needs and the same degree of ignorance about those needs. They take a view about their needs and search the market for a product that suits the (perceived) needs. Ex-post utility in an unregulated market is a decreasing function of consumers' ignorance. This approach is used to characterise product and advice regulation. It suggests that neither of these interventions will make all consumers better off than in an unregulated equilibrium.