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Externalities and Price Dynamics

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  • Manjira Datta

    (Arizona State University)

Abstract

This paper analyzes dynamic movement of outputs and market- clearing when mutually interdependent economies trade. The equilibrium evolution of stocks admit the possibility of monotonic or cyclical behavior, even in the long run. However, the prices eventually reach a steady-state but may exhibit monotonic or oscillating behavior, in the short run. Also we show that higher consumption per unit of stock is associated with a lower productivity or with negative externalities. A stronger preference for the foreign good, increases or decreases consumption depending whether the externality is negative or positive.

Suggested Citation

  • Manjira Datta, "undated". "Externalities and Price Dynamics," Working Papers 9710, Arizona State University, Department of Economics.
    • Handle: RePEc:wop:astewp:9710
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    File URL: http://www.cob.asu.edu/ecn/papers/wp1997/wp97_10.pdf
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    References listed on IDEAS

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    Cited by:

    1. Datta, Manjira & Mirman, Leonard J., 1999. "Externalities, Market Power, and Resource Extraction," Journal of Environmental Economics and Management, Elsevier, vol. 37(3), pages 233-255, May.
    2. Manjira Datta, "undated". "Stationary Temporary Equilibrium in a General Model of Optimal Accumulation and Trade," Working Papers 97/8, Arizona State University, Department of Economics.
    3. Spiros Bougheas & Panicos Demetriades & Edgar Morgenroth, 2003. "International aspects of public infrastructure investment," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 884-910, November.
    4. Datta, Manjira, 1997. "Externalities and Price Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 587-603, August.
    5. Manjira Datta & Leonard J. Mirman, 2000. "Dynamic Externalities and Policy Coordination," Review of International Economics, Wiley Blackwell, vol. 8(1), pages 44-59, February.
    6. Datta, Manjira, 2017. "Existence and uniqueness of equilibrium in a distorted dynamic small open economy," Economics Letters, Elsevier, vol. 152(C), pages 19-22.
    7. Akihiko Yanase, 2005. "Pollution Control in Open Economies: Implications of Within-period Interactions for Dynamic Game Equilibrium," Journal of Economics, Springer, vol. 84(3), pages 277-311, May.

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    More about this item

    Keywords

    Externality; international trade;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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