About the Speaker:

Dr Teo is an Assistant Professor of Economics at the School of Humanities and Social Sciences. He obtained his Ph.D. from the University of New South Wales in 2008. His research interests are in Industrial Organization and Applied Game Theory. He has recently published in the B.E. Journal of Theoretical Economics and Information Economics and Policy.

Abstract:

We examine the incentives for integration between two nations of different sizes in a set up similar to Alesina and Spolaore (2003): individuals are indexed by location, each nation (comprising of individuals) is an interval, and the public good in each nation is provided from its capital --- located in the middle of the nation. We begin with an analysis of full integration, where upon integration, each country gives up its sovereignty and there is a joint decision about the location of the new nation’s capital. Then, we extend our analysis to federated integration where each country maintains its capital but nations jointly decide a unique level of infrastructure provision (which lowers transportation costs). For both full as well as federated integration, a robust finding is that integration occurs if the size differences are smaller than a threshold. Despite this robust finding, there is a key difference between the two cases. When capital maintenance costs are high, the benefits of integration are larger for small nation in the full integration case. The large nation always benefit more than the smaller nation for the federated integration case. Thus, while opposition to full scale integration might come from large nations, the opposition for federated integration might well come from smaller nations.

Reservation:

Admission is free.  Please reply to Christina, e-mail: achristina@ntu.edu.sg or Tel: 6790-5689 to confirm your attendance.