International trade Essay Example | Topics and Well Written Essays - 1500 words

International trade - Essay Example At the same time, least productive firms will be forced out and only produce for domestic market, this in turn will also lead to the exit of the least productive firms (Melitz, 2003). The Melitz model uses heterogeneous firms to perform its analysis under the general states of equilibrium. This concept explains how the exit of least productive firms leads to allocation of huge market shares to the well performing firms thus resulting into increase in productivity level. This indicates how certain firms are exposed to many opportunities by exit of the other non-performing ones. This paper also adapts the model for monopolistically competitive firms, that is, only highly competitive firms are given consideration under general equilibrium conditions. In addition, the concept suggests that uncertainty in production is a very important aspect and can help a great deal when trying to explain the behavior of firms. Uncertainty creates a business environment in which the players cannot predi ct the outcome of their competition and each firm therefore competes at its best. Also under this theory, there is an assumption that only the most productive firms that earn positive results remain in the competition. This analysis further puts focus on long run effects of this type of trade on performance and behavior of firms under different levels of productivity. Another very important aspect that this study emphasizes on is the introduction of dynamic future oriented market entry decisions by firms that are facing sunk costs of market entry. The study has focused on the importance of such market cost of such market entries and their effects on the firms’ competition. Description of the model The Melitz model focuses on three aspects to analyze its studies. These include demand, production, and aggregation. These aspects are relative and are majorly the key determinants in decision-makings. Demand Demand relates to consumer preferences. The preferences relating to the re presentative of the consumer can be got by CES utility function all over a range of goods that is represented by the company. The function below can be used in this analysis (w)q dw]1/p ? represent the value of the mass of the goods available. The available goods are considered a substitute which implies that P is less than 1, but greater than 0. 0 1 Consumer behavior in regards to demand can be analyzed by considering a set of products that the consumer takes against the aggregate price of the commodities. The presence of simultaneous entry and exit during the state of steady equilibrium can be attributed to the sunken market entry cost. It also explains the survival probabilities of exporting firms in the market (Johnson, 2010). These aggregates can be applied in deriving optimal consumption and decisions regarding expenditure of various individuals. Production The industry has many firms, and each of these firms chooses to produce variety of products w. the production process is viewed to require only one important factor, that is labor. The factor of production labor L is in-elastically available at its total level. The technological level of these firms is represented by cost functions hat show constant marginal cost that is characterized by fixed overhead cost. Labor used can therefore be represented using linear function for output q i.e 1= f + q/q. An assumption that all firms share similar fixed cost f

Assignment2-1 Essay Example | Topics and Well Written Essays - 500 words

Assignment2-1 - Essay Example Reconstruction was a failure in the South, as the white Southerners placed several obstacles in the way of African-American political participation. With the abolition of slavery through the Thirteenth Amendment of 1865, African-Americans sought political participation. This was bitterly opposed by the white Southerners, who were granted the right by President Johnson to form new governments. They passed the Black Code, denying African-Americans the right to buy or lease land, to vote, to attend public schools, to testify against whites or serve on juries and continue to toil as servants for their former masters. Racial supremacists, like the Ku Klux Klan, resorted to violence and lynching of African-Americans. The race riots in Memphis and New Orleans in 1866 saw the blatant massacre of eighty-nine African-Americans. The radical Republican Congress, although it overrode President Johnson’s obstinate resistance to reconstruction, and resorted to the use of federal troops in th e South, could not achieve its objectives due to the severe economic depression in the South, the racism inherent in generations of white Southerners and the electoral malpractices resorted to by them. 2 In the light of the new constitutional legislation enacted by the Republican Congress, the Reconstruction may be viewed as a success. The Fourteenth Amendment of 1868 guaranteed Blacks civil rights and equality before the law; the Fifteenth Amendment of 1870 mandated racially impartial voting rights; the Civil Rights Act of 1875 banned racial segregation. The Freedmen’s Bureau, whose powers were expanded by Congress, assisted former slaves to assert their rights. Several former slaves, including Oscar Dunn, Francis Cardozo, John Menard, Jasper White and Hiram Revels, held legislative office, and entered the Congress, the Senate and the judiciary. 3 Equal civil and political rights for African-Americans were ensured by such