3. Goods-market Desirability of Minimum Wages (joint with Dao-Zhi Zeng).
Published in Economica, 2024
This paper presents a general equilibrium model incorporating heterogeneous firms and a perfectly competitive labour market to explore the desirability of minimum wages. We demonstrate that a low minimum wage could enhance social welfare, assuming equal weighting for all individuals. This occurs because the introduction of minimum wages has the potential to mitigate the goods market distortions arising from imperfect competition, firm heterogeneity, and free entry. Additionally, we illustrate that the optimal minimum wage is positively associated with the preference intensity for differentiated products relative to the numeraire and population size, while it negatively correlates with the degree of love for variety, entry cost, and upper bound of marginal labour requirements.Recommended citation: Pan, R. and Zeng, D. -Z. (2024). Goods market desirability of minimum wages. Economica, 1–36. https://doi.org/10.1111/ecca.12544
2. The effects of trade liberalization on tax avoidance (joint with Dao-Zhi Zeng).
Published in International Journal of Economic Theory, 2023
Does trade liberalization aggravate tax avoidance? We build a three-country model of tax competition consisting of two non-haven countries and one tax haven in which goods are traded between the non-havens and firms may shift profits to the tax haven. When the non-havens cooperate, the reduction in trade costs does not change the degree of tax avoidance. In contrast, when the non-havens do not cooperate, the equilibrium tax rates become higher, resulting in more tax avoidance. Furthermore, trade liberalization strengthens the tax competition between non-havens, which further increases tax-avoidance activities.Recommended citation: Pan, R., & Zeng, D. Z. (2023). The effects of trade liberalization on tax avoidance. International Journal of Economic Theory 19(4), 898-932. [link] One of the most viewed papers during its first 12 months of publication (year 2023) on IJET
1. Carbon Tax vs. Emission Trading in a Monopolistically Competitive Market with Heterogeneous Firms (joint with Kefu Lin, Dao-Zhi Zeng)
Published in The Annals of Regional Science, 2023
We establish a general-equilibrium model to compare the efficiency of two emission regulation policies used worldwide: the carbon tax (CT) and the emission trading scheme (ETS). Assuming monopolistic competition and heterogeneous firms, we show that the ETS is better in an economy with a high degree of heterogeneity, and the CT is better otherwise. We also explore how the market distortions under these two regulation policies are different. Moreover, we find that the excessive input of an immobile resource in manufacturing production may result in market inefficiency.Recommended citation: Lin, K., Pan, R., and Zeng, D.-Z., (2023): Carbon Tax vs. Emission Trading in a Monopolistically Competitive Market with Heterogeneous Firms, The Annals of Regional Sciences, 1-24. [link]
Unequal Gains: Profit Shifting, Trade Liberalization, and Welfare in Asymmetric Economies. (Submitted)
Global Market Desirability of Minimum Wages. (joint with Dao-Zhi Zeng)
Too much on trade? Monopolistic competition, trade liberalization, and labor misallocation within firms.
Trade, welfare, and efficiency of minimum wages (joint with Yihao Liu, Dao-Zhi Zeng)
Rui Pan and Dao-Zhi Zeng. 2019. Tax competition and social welfare with and without tax haven. The 9th Asian Conference in Regional Science, April 20-21, Shanghai, China.
Rui Pan and Dao-Zhi Zeng. 2019. Tax competition with and without tax haven. The Applied Regional Science Conference 32nd Annual Meeting, November 23rd-24th, 2019, Saga, Japan.
Rui Pan and Dao-Zhi Zeng. 2022. Goods-market desirability of minimum wages. The 11th Spring Meeting of the Japan Society of International Economics, June 4th, 2022, Hirosaki, Japan.
Rui Pan and Dao-Zhi Zeng. 2022. The effect of trade liberalization on tax avoidance. The Applied Regional Science Conference 36th Annual Meeting, December 17th-18th, 2022, Kofu, Japan.