Chapter 7 Fireflies V2

Cobb-Douglas Market Model for a Customs Unio
Country 1
Customs Union Price, Pu Supply Price, Ps Demand Price, Pd
12 12 12
12 12
Share of Financial Contribution Constants
b1 Transfer1 c
0.5 -60 37.9608224501
Country 2
12 12 12
12 12
b2 Transfer2 c
0.5 60 94.9020561253
Customs Union Expenditure

40
las Market Model for a Customs Union
World Market Price, Pw Supply Demand

10 80 100
Parameters of Calibration 80 100
Constants Elasticities
d of Supply of Demand
270.1920077041 0.3 -0.4

10 200 160
432.3072123266 0.3 -0.4
Cost Total Benefit Welfare Revenue Expenditure Foreign Exchange
221.5385 3908.7241675 3427.186 960 1200 -260

553.8462 6253.958668 6160.113 2400 1920 460
Government Budget Producer Surplas Consumer Surplas
-20 738.4615384615 2708.7241674913

-20 1846.1538461539 4333.9586679861
Country 1
10 10 10
12 12
b1 Transfer1 c
0.5 0 37.9608224501
Country 2
10 10 10
12 12
b2 Transfer2 c
0.5 0 94.9020561253

0
Customs Union Price, Pu Transfer1 Transfer2

10 0.00 0.00
11
12
13
14
15
16
17
18
19
20

10 75.74179848 107.5654
270.1920077041 0.3 -0.4

10 189.3544962 172.1046
432.3072123266 0.3 -0.4
Transfer Functions at Equal Shares of Financia

1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
10 11 12 13 14 15 16
Transfer1 Transfer2
174.7888 3991.6216629 3498.597 757.418 1075.6537569 -318.2357721333

436.9719 6386.5946606 6122.122 1893.545 1721.0460111 172.498950906
qual Shares of Financial Contributions
4 15 16 17 18 19 20
Transfer1 Transfer2
0 582.6292190764 2915.967905937

0 1456.5730476909 4665.5486494992
Country 1
12 12 12
12 12
b1 Transfer1 c
0.5 -60 37.9608224501
Country 2
12 12 12
12 12
b2 Transfer2 c
0.5 60 94.9020561253

40

10 80 100
270.1920077041 0.3 -0.4

10 200 160
432.3072123266 0.3 -0.4
221.5385 3908.7241675 3427.186 960 1200 -260

553.8462 6253.958668 6160.113 2400 1920 460
Union Welfare
9587.298
-20 738.4615384615 2708.7241674913

-20 1846.1538461539 4333.9586679861
Microsoft Excel 15.0 Answer Report
Worksheet: [Chapter-7 (Fireflies).xlsx]7b
Report Created: 06-Apr-17 10:10:33 PM
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: GRG Nonlinear
Solution Time: 0.031 Seconds.
Iterations: 4 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001, Use Automatic
Convergence 0.0001, Population Size 100, Random Seed 0, Derivatives Forwa
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%
Objective Cell (Max)

Cell Name
$K$4 Welfare
Variable Cells
Cell Name
$A$4 Customs Union Price, Pu

Solver Engine
Solver Options

Cell Name
$K$12 Welfare
Variable Cells
Cell Name
$A$4 Customs Union Price, Pu
mality conditions are satisfied.
ed, Precision 0.000001, Use Automatic Scaling

100, Random Seed 0, Derivatives Forward, Require Bounds
er Sols Unlimited, Integer Tolerance 1%, Assume NonNegative
Original Value Final Value

3427.1857059528 3521.8799755804
Original Value Final Value Integer

12 4.7428935255 Contin
mality conditions are satisfied.
ed, Precision 0.000001, Use Automatic Scaling

100, Random Seed 0, Derivatives Forward, Require Bounds
er Sols Unlimited, Integer Tolerance 1%, Assume NonNegative

6160.1125141399 6162.4721216282

12 13.0345094054 Contin
Solver Engine
Solver Options

Cell Name
$K$19 Welfare
Variable Cells
Cell Name
$A$4 Customs Union Price, P
ptimality conditions are satisfied.
ited, Precision 0.000001, Use Automatic Scaling

e 100, Random Seed 0, Derivatives Forward, Require Bounds
eger Sols Unlimited, Integer Tolerance 1%, Assume NonNegative

9587.2982200927 9598.7096391532

12 10.0000000031 Contin
Country 1
5 5 5
12 12
b1 Transfer1 c
0.8 -212.7470505467 37.9608224501
Country 2
5 5 5
12 12
b2 Transfer2 c
0.2 212.7470505467 94.9020561253

768.5082308888
Customs Union Price, Pu Welfare1 Welfare2

5 3147.76 6079.36
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

10 61.52145732 141.9334
270.1920077041 0.3 -0.4

10 153.8036433 227.0934
432.3072123266 0.3 -0.4
Welfare Functions of the Member Countries

7000.00
6000.00
5000.00
4000.00
3000.00
2000.00
1000.00
0.00
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Welfare1 Welfare2
0.00
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Welfare1 Welfare2
70.9863 4235.6129536 3147.761 307.6073 709.66682076 -1016.8661188753

177.4657 6776.9807258 6079.365 769.0182 1135.4669132 -520.1503429022
Countries
0 21 22 23 24 25 26 27 28 29 30
0 21 22 23 24 25 26 27 28 29 30
-614.806584711 236.620989691 3525.946132887

-153.7016461778 591.5524742274 5641.5138126192
Market Model for a Customs Union with Protect
Country 1
12 12 12
12 12
b1 Transfer1 c
0.8 -72 37.9608224501
Protection Rate / Subsidy Rates

r1 s1 v1
0.00 0.00 0.00
Country 2
12 12 12
12 12
b2 Transfer2 c
0.2 72 94.9020561253

r2 s2 v2
0.00 0.00 0.00
s2 Transfer1 Foreign Exchange1

0.00 -72.00 -272.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
del for a Customs Union with Protection Rate & Subsidy Rates

10 80 100
270.1920077041 0.3 -0.4

10 200 160
432.3072123266 0.3 -0.4

40
Government Budget1
-32.00 Transfer Effect in Country1 at an increase in the Produce
-36.72
0.00
-41.28 0.00 0.05 0.10 0.15 0.20 0.25 0.30
-45.70 -10.00
-49.99
-20.00
-54.16
-58.20 -30.00
-62.15
-65.99 -40.00
-69.73 -50.00
-73.39
-60.00
-70.00
-80.00
Transfer1
221.5385 3908.7241675 3415.186 960 1200 -272

553.8462 6253.958668 6172.113 2400 1920 472
rease in the Producer Subsidy Rate in Country2 Foreign Exchange Effect in Country1 at an increase
0.00
0 0.25 0.30 0.35 0.40 0.45 0.50 0.00 0.05 0.10 0.15 0.20 0.25
-50.00
-100.00
-150.00
-200.00
-250.00
-300.00
Transfer1 Foreign Excha

-32 738.4615384615 2708.7241674913

-8 1846.1538461539 4333.9586679861
n Country1 at an increase in the Producer Subsidy Rate in Country2 Government Budget Effect in Coun
0.00
0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 1 2 3
-10.00
-20.00
-30.00
-40.00
-50.00
-60.00
-70.00
-80.00
Foreign Exchange1
t Budget Effect in Country1 at an increase in the Producer Subsidy Rate in Country2
0.00
1 2 3 4 5 6 7 8 9 10 11
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
Government Budget1
Country 1
10 10 10
12 12
b1 Transfer1 c
0.5 0 37.9608224501

r1 s1 v1
0.00 0.00 0.00
Country 2
10 10 10
12 12
b2 Transfer2 c
0.5 0 94.9020561253

r2 s2 v2
0.00 0.00 0.00
r-union
0.00
r-union Transfer1 Government Budget1

0.00 0.00 0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
for a Customs Union with Protection Rate & Subsidy Rates

10 75.74179848 107.5654
270.1920077041 0.3 -0.4

10 189.3544962 172.1046
432.3072123266 0.3 -0.4

0
Producer Surplas1
582.63 Trade-off between Producer Surplas & Government Budget of Country1 under a Protect
620.78
659.48
698.71
738.46
778.71
819.44
860.65
902.32
944.43
986.99
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.

174.7888 3991.6216629 3498.597 757.418 1075.6537569 -318.2357721333

436.9719 6386.5946606 6122.122 1893.545 1721.0460111 172.498950906
get of Country1 under a Protectionist Price Policy in the Customs Union

1000.00
950.00
900.00
850.00
800.00
750.00
700.00
650.00
600.00
550.00
500.00
0.50 0.60 0.70 0.80 0.90 1.00
0 582.6292190764 2915.967905937

0 1456.5730476909 4665.5486494992
Country 1
10 10 10
12 12
b1 Transfer1 c
0.5 0 37.9608224501

r1 s1 v1
0.00 0.00 0.00
Country 2
10 10 10
12 12
b2 Transfer2 c
0.5 0 94.9020561253

r2 s2 v2
0.00 0.00 0.00
r-union
0.00
Protection in a Customs Union
r-union Transfer1 Government Budget1
0.00 0.00 0.00
0.05 -13.00 -13.00
0.10 -27.39 -27.39
0.15 -43.09 -43.09
0.20 -60.00 -60.00
0.25 -78.06 -78.06
0.30 -97.21 -97.21
0.35 -117.39 -117.39
0.40 -138.54 -138.54
0.45 -160.61 -160.61
0.50 -183.58 -183.58
for a Customs Union with Protection Rate & Subsidy Rates

10 75.74179848 107.5653756933
270.1920077041 0.3 -0.4

10 189.3544962 172.1046011092
432.3072123266 0.3 -0.4

0
a Customs Union Protection in Non-member Coun
Producer Surplas1 r1 Government Budget1
582.63 0.00 0.00
620.78 0.05
659.48 0.10
698.71 0.15
738.46 0.20
778.71 0.25
819.44 0.30
860.65 0.35
902.32 0.40
944.43 0.45
986.99 0.50
Cost Total Benefit Welfare Revenue Expenditure
174.7888 3991.6216629 3498.597 757.418 1075.6537569
Cost Total Benefit Welfare Revenue Expenditure

436.9719 6386.5946606 6122.122 1893.545 1721.0460111
Non-member Countries
Producer Surplas1
582.63
Foreign Exchange Government Budget Producer Surplas Consumer Surplas
-318.2357721333 0 582.6292190764 2915.967905937
Foreign Exchange Government Budget Producer Surplas Consumer Surplas

172.498950906 0 1456.5730476909 4665.5486494992

Chapter 7 Fireflies V2

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Chapter 7 Fireflies V2

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Cobb-Douglas Market Model for a Customs Unio

Customs Union Expenditure

World Market Price, Pw Supply Demand

World Market Price, Pw Supply Demand

Cost Total Benefit Welfare Revenue Expenditure Foreign Exchange

Government Budget Producer Surplas Consumer Surplas

Customs Union Expenditure

Customs Union Price, Pu Transfer1 Transfer2

World Market Price, Pw Supply Demand

World Market Price, Pw Supply Demand

Transfer Functions at Equal Shares of Financia

Cost Total Benefit Welfare Revenue Expenditure Foreign Exchange

qual Shares of Financial Contributions

Government Budget Producer Surplas Consumer Surplas

Customs Union Expenditure

World Market Price, Pw Supply Demand

World Market Price, Pw Supply Demand

Cost Total Benefit Welfare Revenue Expenditure Foreign Exchange

Government Budget Producer Surplas Consumer Surplas

Objective Cell (Max)

Microsoft Excel 15.0 Answer Report

Objective Cell (Max)

ed, Precision 0.000001, Use Automatic Scaling

Original Value Final Value

Original Value Final Value Integer

mality conditions are satisfied.

ed, Precision 0.000001, Use Automatic Scaling

Original Value Final Value

Original Value Final Value Integer

Objective Cell (Max)

ited, Precision 0.000001, Use Automatic Scaling

Original Value Final Value

Original Value Final Value Integer

Customs Union Expenditure

Customs Union Price, Pu Welfare1 Welfare2

World Market Price, Pw Supply Demand

World Market Price, Pw Supply Demand

Welfare Functions of the Member Countries

Cost Total Benefit Welfare Revenue Expenditure Foreign Exchange

Government Budget Producer Surplas Consumer Surplas

Protection Rate / Subsidy Rates

Protection Rate / Subsidy Rates

s2 Transfer1 Foreign Exchange1

World Market Price, Pw Supply Demand

World Market Price, Pw Supply Demand

Customs Union Expenditure

Cost Total Benefit Welfare Revenue Expenditure Foreign Exchange

Transfer1 Foreign Excha

Government Budget Producer Surplas Consumer Surplas

Protection Rate / Subsidy Rates

Protection Rate / Subsidy Rates

r-union Transfer1 Government Budget1

World Market Price, Pw Supply Demand

World Market Price, Pw Supply Demand

Customs Union Expenditure

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.

Cost Total Benefit Welfare Revenue Expenditure Foreign Exchange

get of Country1 under a Protectionist Price Policy in the Customs Union

Government Budget Producer Surplas Consumer Surplas

Protection Rate / Subsidy Rates

Protection Rate / Subsidy Rates

World Market Price, Pw Supply Demand

World Market Price, Pw Supply Demand

Customs Union Expenditure