Why Per-Capita Income Matters

James R. Markusen 's current research looks at per-capita income as a determinant of international trade and environmental policies. Often, international negotiations take place between countries of very different per-capita income levels, yet there is little theoretical or empirical research as to why and how per-capita income matters. Mr Markusen's work contrasts cooperative and non-cooperative outcomes in a situation where there is a global environmental externality such as CO2 pollution. His results show that when per-capita income differences are large, a poor country may be worse off when a rich country abates: the poor country's term-of-trade loss can outweigh its free-rider benefits from the large-country's abatement.

The second research project that James Markusen will be focusing on during his stay at CESifo is inter-city specialisation and the effects of transport improvements, such as high-speed rail links.

Mr Markusen's principal interests are in the field of international trade. His research for the last 25 years has concentrated on the location, production and welfare effects of large-scale firms and multinational corporations. More recently he has examined export-platform foreign direct investment, fragmentation and trade at the extensive margin, and selection and learning effects in multinational firms explaining their higher wages.

James R. Markusen is Distinguished Professor at the University of Colorado, Boulder, having previously served as Professor at University College Dublin and the University of Western Ontario. He has an extensive list of publications in major economic journals. His many years of research on multinational firms culminated in the MIT publication: Multinational Firms and the Theory of International Trade (2004). He is also the author of the standard textbook: International Trade: Theory and Evidence (McGraw-Hill, 1995).