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See detailPiracy and Competition
Belleflamme, Paul; Picard, Pierre M UL

in Journal of Economics & Management Strategy (2007), 16(2), 351-383

The effects of (private, small-scale) piracy on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are ... [more ▼]

The effects of (private, small-scale) piracy on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are assumed to be perfectly differentiated, demands are interdependent because the copying technology exhibits increasing returns to scale. We characterize the Bertrand-Nash equilibria in a duopoly. Comparing equilibrium prices to the prices set by a multiproduct monopolist, we show that competition drives prices up and may lead to price dispersion. Competition reduces total surplus in the short run but provides higher incentives to create in the long run. [less ▲]

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See detailWelfare, home market effects, and horizontal foreign direct investment
Behrens, Kristian; Picard, Pierre M UL

in Canadian Journal of Economics (2007), 36(3), 523-545

We investigate the spatial distribution and organization of an imperfectly competitive industry when firms may choose to operate more than a single production unit. Focusing on a short-run setting with a ... [more ▼]

We investigate the spatial distribution and organization of an imperfectly competitive industry when firms may choose to operate more than a single production unit. Focusing on a short-run setting with a fixed mass of firms, we first fully characterize the spatial equilibria analytically. Comparing the equilibrium and the first-best, we secondly show that both organizational and spatial inefficiencies may arise. In particular, when fixed costs are low, when transport costs are high, and when products are close substitutes, the market outcome may well have to too many multinationals operating from a social point of view (`over-investment'). As a by-product, under-agglomeration of exporters in the larger market may arise. [less ▲]

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See detailUnions and Firms Agglomeration
Toulemonde, Eric; Picard, Pierre M UL

in European Economic Review (2006), 50(3), 669-694

Economic geography models predict the agglomeration of manufacturing activies only if the workforce is mobile. Still, as the E.U.’s experience shows, core–periphery patterns exist even though the ... [more ▼]

Economic geography models predict the agglomeration of manufacturing activies only if the workforce is mobile. Still, as the E.U.’s experience shows, core–periphery patterns exist even though the workforce is rather immobile. The paper provides a theoretical explanation for such core–periphery patterns through the effect that unions have on firms’ incentive to agglomerate in a region. The paper offers fully analytical results about location equilibria and some interesting welfare properties. [less ▲]

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See detailTax competition, location and horizontal foreign direct investment
Behrens, Kristian; Picard, Pierre M. UL

E-print/Working paper (2005)

We develop a model of capital tax competition in which imperfectly competitive firms choose both the number of plants they operate and their location. When compared to models with single-plant firms, the ... [more ▼]

We develop a model of capital tax competition in which imperfectly competitive firms choose both the number of plants they operate and their location. When compared to models with single-plant firms, the presence of multinationals reverses some standard results. First, instead of being subsidized, capital may actually be taxed in equilibrium, which shows that the presence of taxable ‘multinational rents’ relaxes tax competition. Second, even when firms are subsidized, their subsidyinclusive profits may be decreasing in subsidies, due to fiercer price competition by more multinationals. Third, multinationals may give rise to multiple equilibria in the tax game, one of which can be a ‘subsidy trap’ characterized by many multinationals, high subsidy levels, and low welfare. [less ▲]

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See detailAgricultural Sector and Industrial Agglomeration
Zeng, Dao-Zhi; Picard, Pierre M UL

in Journal of Development Economics (2005), 77(1), 75-106

In many developing countries, agriculture hires at least as many workers as manufacturing industries. We investigate an economic geography model in which agricultural goods are costly to transport and in ... [more ▼]

In many developing countries, agriculture hires at least as many workers as manufacturing industries. We investigate an economic geography model in which agricultural goods are costly to transport and in which manufactures hire labor from the local agricultural sector as unskilled labor. Our conclusions show that the parameters in the agricultural sector are crucial to determine the spatial configuration of economic activity. We provide an analytic treatment to the model. The location equilibria are compared with the first and second best outcomes. [less ▲]

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See detailContracting out and labor demand elasticities
Gorg, Holger; Picard, Pierre M UL; Strobl, Eric A

E-print/Working paper (2005)

We examine the relationship between contracting out and the wage elasticity of labor demand in outsourcing plants. A simple theoretical model suggests that firms engaged in contracting out have lower wage ... [more ▼]

We examine the relationship between contracting out and the wage elasticity of labor demand in outsourcing plants. A simple theoretical model suggests that firms engaged in contracting out have lower wage elasticities. Estimating plant level dynamic labor demand equations for Irish manufacturing we find evidence supportive of this. [less ▲]

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See detailCompetition over piratable goods
Belleflamme, Paul; Picard, Pierre M UL

E-print/Working paper (2004)

The effects of (private, small-scale) copying on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are ... [more ▼]

The effects of (private, small-scale) copying on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are assumed to be perfectly horizon tally differentiated, demands are interdependent because the copying technology exhibits increasing returns to scale. We characterize the symmetric Nash equilibria of the pricing game played by n producers of information goods. We show thereby how the producers' attitudes towards piracy are interdependent and evolve with the relative attractiveness of copies. [less ▲]

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See detailEndogenous Qualifications and Firms' Agglomeration
Toulemonde, Eric; Picard, Pierre M UL

in Journal of Urban Economics (2004), 55(3), 458-477

This paper analyzes firms' location when workers endogenously choose to qualify for professional skills but when they remain uncertain about the potential match between their personal abilities and/or ... [more ▼]

This paper analyzes firms' location when workers endogenously choose to qualify for professional skills but when they remain uncertain about the potential match between their personal abilities and/or affinities and the firms' specific production tasks. By qualifying in a region where firms agglomerate, workers benefit from higher prospects of good match. At the equilibrium, we show that firms may locate in a single cluster, symmetric clusters or even asymmetric clusters. Comparative statics with respect to product market demand and labor supply parameters are provided. [less ▲]

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See detailEconomic Geography and the Distribution of Profits
Picard, Pierre M UL; Thisse, Jacques François

in Journal of Urban Economics (2004), 56(1), 144-167

In modern economies, the amount of profits distributed to shareholders is far from being negligible. We show that the way they are distributed among agents matters for the space-economy. For example, the ... [more ▼]

In modern economies, the amount of profits distributed to shareholders is far from being negligible. We show that the way they are distributed among agents matters for the space-economy. For example, the existence of mobile rentiers is sufficient to make the symmetric configuration unstable for all transport cost values and to allow for the partial agglomeration of firms. Obviously, to account for profits and for their distribution, the assumption of free entry must be abandoned. So doing, we ignore fixed costs and show that it is the combination of imperfect competition and firms’ indivisibility that matters for the formation of agglomeration in economic geography. [less ▲]

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See detailRegional Asymmetries: Economies of Agglomeration Versus Unionized Labor Markets
Picard, Pierre M UL; Toulemonde, Eric

in Regional Science & Urban Economics (2003), 33(2), 223-49

We study the geographical location of a unionized manufacturing industry under technological externalities. When firms benefit from locating in the vicinity of similar firms, we show that they locate in ... [more ▼]

We study the geographical location of a unionized manufacturing industry under technological externalities. When firms benefit from locating in the vicinity of similar firms, we show that they locate in symmetric, partially asymmetric or single clusters.We examine the effects of changes in the productivity parameters, in the product demand parameters and in the union characteristics. Finally, we explore the possibility of hysteresis in firm location and we analyze the welfare implication of a change in union power. [less ▲]

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See detailTaxation and Labor Markets
Picard, Pierre M UL; Toulemonde, Eric

in Journal of Economics (2002), 78(1), 29-56

We exploit the common features of models such as union-firm wage bargaining, search and efficiency wage models to develop a framework that can be used for analyzing the effects of any budget-neutral tax ... [more ▼]

We exploit the common features of models such as union-firm wage bargaining, search and efficiency wage models to develop a framework that can be used for analyzing the effects of any budget-neutral tax reform on employment in these models. We show that taxes paid by workers are not equivalent to taxes paid by firms when taxes are non linear. Moreover, increasing progressivity is good for employment in these models. [less ▲]

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See detailOn the Equivalence of Taxes Paid by Employers and Employees
Picard, Pierre M UL; Toulemonde, Eric

in Scottish Journal of Political Economy (2001), 48(4), 461-70

In this paper we study the employment effects of a budget neutral restructuring of taxes levied on employers and employees. We derive conditions for taxes levied on workers to have the same employment ... [more ▼]

In this paper we study the employment effects of a budget neutral restructuring of taxes levied on employers and employees. We derive conditions for taxes levied on workers to have the same employment effects as taxes levied on firms under standard processes of wage determination. [less ▲]

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See detailJob additionality and deadweight spending in perfectly competitive industries
Picard, Pierre M UL

in Journal of Public Economics (2001), 79(3), 521-541

This paper links the old literature on employment subsidies with the current theories of contract and regulation. One important source of inefficiency of employment subsidies is non-additional employment ... [more ▼]

This paper links the old literature on employment subsidies with the current theories of contract and regulation. One important source of inefficiency of employment subsidies is non-additional employment and deadweight spending which occur when private firms receive a subsidy for jobs that would have been created without the subsidy. We identify the asymmetry of information between the government and the private firm as the source of these problems. When the government proposes optimal incentive contracts to promote employment, we show that all employment creations are additional and that the deadweight spending is equal to the information rent, which may be null when firms’ types are discrete. [less ▲]

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See detailOptimal Employment Subsidies and Market Structures in Industries with Unemployment
Picard, Pierre M UL

in Oxford Economic Papers (2001), 53(2), 352-372

In this paper we analyze the issue of optimal employment subsidies in imperfectly competitive industries in which a distortion in the labour market generates involuntary unemployment. As a benchmark case ... [more ▼]

In this paper we analyze the issue of optimal employment subsidies in imperfectly competitive industries in which a distortion in the labour market generates involuntary unemployment. As a benchmark case, we focus on monopolies and duopolies and on complete information between firms and government. We characterize the levels and creations of employment in the subsidized industry and we check when such employment policies are more favorable to the least productive firms. [less ▲]

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See detailOptimal Employment Subsidies to Heterogeneous Workers: Unemployment-Trap, Job-Additionality and Tax Rates
Picard, Pierre M UL

in Annales d’Economie et de Statistique = Annals of Economics and Statistics (2001), 62

Unemployment and welfare benefits generate unemployment traps. In this paper, we design the optimal employment subsidies that allow governments to reduce unemployment traps under constant budget deficit ... [more ▼]

Unemployment and welfare benefits generate unemployment traps. In this paper, we design the optimal employment subsidies that allow governments to reduce unemployment traps under constant budget deficit and without diminishing workers' welfare. We explore the effects of work incentives on the shape and on the properties of employment subsidies. We finally address the issues of self-help effect and job-additionality. [less ▲]

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