2014
Takashi Kamihigashi and John Stachurski Journal of Mathematical Economics
Yunfang Hu and Kazuo Mino Pacific
Economic Review
Kazuo Mino Economics Letters
Keisuke Hattori and Keisaku Higashida Economica
Tadashi Morita, Hajime Takatsuka, and Kazuhiro Yamamoto Japanese
Economic Review
Tadashi Morita and Koki Sugawara Journal of International Trade and
Economic Development
Yuichi Furukawa Economic Theory
Takashi Kamihigashi International
Journal of Economic Theory
Kenji Fujiwara Journal
of Public Economic Theory
Kenji Fujiwara Australian
Economic Papers
Kenji Fujiwara International
Review of Economics and Finance
Kenji Fujiwara and Ryoma Kitamura Journal of International Trade and Economic Development
Takashi Kamihigashi, Kevin Reffett, and Masayuki Yao International Journal of Economic Theory
Yin-Wong Cheung and Eiji Fujii Oxford Economic Papers
Akihiko Yanase Open
Economies Review
Akihiko Yanase Strategic
Behavior and the Environment
Akihiko Yanase Economics
Bulletin
Yasushi Kawabata and Yasuhiro Takarada International
Economics
Kenta Tanaka, Keisaku Higashida, and
Shunsuke Managi Australian Journal of
Agricultural and Resource Economics
Keisuke Hattori and Keisaku Higashida Information Economics and Policy
Naoto Jinji Economics Letters
Takeo Hori, Masako Ikefuji and Kazuo Mino International Economic Review
Noriaki Matsushima and Kazuhiro Takauchi Transportation Research Part B:
Methodological
Angus C. Chu, Guido Cozzi, and Yuichi Furukawa Review
of Economic Dynamics
Flora Bellone, Kozo Kiyota, Toshiyuki Matsuura, Patrick
Musso, and Lionel Nesta European Economic
Review
Doan Thi Thanh Ha, and Kozo Kiyota Japanese Economic Review
Yoshinori Kurokawa Journal of
Economic Surveys
November 2014
Takashi Kamihigashi (Kobe University) and John
Stachurski (Australian National University)
gPerfect Simulation for Models of Industry Dynamicsh
Journal of Mathematical Economics
In this paper we introduce a technique for perfect
simulation from the stationary distribution of a standard model of industry
dynamics. The method can be adapted to other, possibly non-monotone,
regenerative processes found in industrial organization and other fields of
economics. The algorithm we propose is a version of coupling from the past. It
is straightforward to implement and exploits the regenerative property of the
process in order to achieve rapid coupling.
Yunfang Hu and Kazuo Mino
gCapital Accumulation and Structural Change in a
Small-Open Economyh
Pacific Economic Review
This paper explores the relation between capital
accumulation and transformation of industrial structure in a small
open-economy. Using a three-sector, neoclassical growth model with
non-homothetic preferences, we examine dynamic behavior of the small country in
the alternative trade regimes. We show that capital accumulation plays a
leading role in the process of structural transformation. It is also revealed
that the trade pattern significantly affects structural change. We demonstrate
that our model can mimic a typical pattern of change in industrial structure
that has been observed in many developed economies.
Kazuo Mino
gA Simple Model of Endogenous Growth with Financial
Frictions and Firm Heterogeneityh
Economics Letters
This paper constructs a simple model of endogenous
growth with financial frictions and firm heterogeneity. In the presence of
financial constraints and heterogeneity in production efficiency of firms, the
firms whose efficiency exceeds the cutoff level produce and the entrepreneurs
who own those firms become borrowers. We show that even if production
technology of each firm has an Ak property, the aggregate economy has
transition dynamics and that the balanced growth rate depends on the aggregate
distribution of wealth between rentiers and entrepreneurs.
Keisuke Hattori (Osaka University of Economics) and
Keisaku Higashida (Kwansei Gakuin University)
gWho benefits from misleading advertising?h
Economica
Considering a model of price and misleading
advertising competition between two brands producing horizontally and
vertically differentiated brands, we investigate allocative implications of
misinformation and related regulatory policies. Although misinformation
distorts consumers' decision-making, certain types of misinformation can
correct inefficiencies resulting from misallocation of goods, thereby
increasing welfare. However, advertising competition may lead to a prisoner's
dilemma for firms and reduce welfare, but smart consumers who are never misled
by misinformation and consumers who prefer a low-quality brand may gain. We
also demonstrate how a biased policymaker who places different weights on
industry profits and consumer benefits behaves in response to misinformation
disseminated by firms.
Tadashi Morita (Kindai University) Hajime Takatsuka
(Kagawa University) Kazuhiro Yamamoto (Osaka University)
gDoes Globalization Foster Economic Growth?h
Japanese Economic Review
This article examines the effects of globalization,
by especially focusing on the relaxation of local equity requirements (LERs) in
developing countries. By constructing an endogenous growth model, where profit
leakage to the South through LERs plays a key role, we obtain the following
results. First, the relaxation of LERs in the South drives the relocation of firms
from the North to the South, yielding a U-shaped growth rate. Second, our
numerical simulations suggest that a sufficient relaxation of LERs is
beneficial for the South, although the shared profit of joint ventures is
maximized through the use of LERs.
Tadashi Morita (Kindai University) Koki Sugawara
(Nagoya Gakuin University)
gHuman Capital and FDI: Development Process of the
Developing Country in an Overlapping Generations Modelh
Journal of International Trade and Economic
Development
We construct an overlapping generations model with
human capital accumulation to analyze the effect of human capital level on
foreign direct investment (FDI) in a small open developing country. In
particular, we assume that manufactured goods have the human capital intensive
technology and young agents choose whether to work or to educate themselves.
When the human capital level in the developing country is sufficiently small,
manufactured goods firms do not conduct FDI and the economy in the developing
country is trapped in poverty. If the government of the developing country
levies a tariff on the imports of manufactured goods, manufacturers conduct FDI
and the economy in the developing country can escape from the poverty trap.
Yuichi Furukawa (Chukyo University)
gLeapfrogging Cycles in International Competitionh
Economic Theory
Technological leadership has shifted at various
times from one country to another. We propose a mechanism that explains this
perpetual cycle of technological leapfrogging in a two-country model including
the dynamic optimization of an infinitely lived consumer. In the model, each
country accumulates knowledge stock over time because of domestic innovation
and spillovers from foreign innovation. We show that if the international
knowledge spillovers are reasonably efficient, technological leadership may
shift first from one country to another, and then alternate between countries
along an equilibrium path.
August 2014
Takashi
Kamihigashi (Kobe University)
gMultiple Interior
Steady States in the Ramsey Model with Elastic Labor Supplyh
International Journal of Economic Theory
In
this paper, we show that multiple interior steady states are possible in the
Ramsey model with elastic labor supply. In particular, we establish the following
three results: (i) for any discount factor and production function, there is a
utility function such that a continuum of interior steady states exist; (ii)
the number of interior steady states can also be any finite number; and (iii)
for any discount factor and production function, there is a utility function
such that there is no interior steady state. Some numerical examples are
provided.
July 2014
Kenji
Fujiwara (Kwansei Gakuin University)
gTax
Principles and Tariff-Tax Reforms under International Oligopolyh
Journal of Public
Economic Theory
In a two-country
duopoly model, this paper compares destination- and origin-based commodity
taxes adjusted to tariff reductions so that the world price and foreign welfare
remain unaltered. We first find that this tariff-tax reform reduces domestic
welfare under the destination principle while the opposite holds under the
origin principle. Then, it is shown that this ranking is reversed if exports
are taxed. In short, which is preferable between destination and origin taxes
depends on the tax principle and which between imports and exports are taxed.
Kenji
Fujiwara (Kwansei Gakuin University)
gTax
Principles and Coordination of Domestic and Trade Policies under Imperfect
Competitionh
Australian
Economic Papers
We construct an
exporting monopoly model to compare destination- and origin-based commodity
taxes in a context of a trade and domestic tax reform. We show that an export
tax reduction and a change in destination (resp. origin) tax that fix the world
price is strictly Pareto-improving (resp. deteriorating), which holds whether
markets are integrated or segmented. This result may provide a new rationale
for preferring the destination-based consumption tax to the origin-based
production tax that has been discussed in the literature of tax harmonization
and tax competition.
Kenji
Fujiwara (Kwansei Gakuin University)
gPareto-Improving
Tariff-Tax Reforms under Imperfect Competitionh
International
Review of Economics and Finance
Constructing a
duopoly model with non-constant marginal costs and a strict Pareto criterion,
this paper examines welfare effects of world-price-fixing tariff reductions
accompanied by adjustments of a domestic tax. If a destination-based consumption
tax is used, this reform achieves a strict Pareto improvement under
sufficiently decreasing marginal costs. If, in contrast, an origin-based
production tax is employed, a strict Pareto improvement holds whether marginal
cost is decreasing or not. Thus, we can conclude that tariff-tax reforms that
improve the world welfare and are irrelevant of tax bases are possible if the
targeted industry exhibits sufficiently decreasing marginal costs.
Kenji
Fujiwara (Kwansei Gakuin University) and Ryoma Kitamura (Kwansei Gakuin
University)
gA
Trade and Domestic Tax Reform in Imperfectly Competitive Marketh
Journal of
International Trade and Economic Development
This paper
develops a model of an export oligopoly to examine the welfare effects of an
export tax reduction and a production tax increase that makes the foreign
country no-worse off. Whether or not entry into the oligopolistic industry is
free, the proposed policy reform is shown to reduce welfare of the
policy-implementing country and the world. Relating this result to the
perfectly competitive case, we closely discuss its implications.
Takashi
Kamihigashi (Kobe University), Kevin Reffett (Arizona State University), and
Masayuki Yao (Keio University)
gAn Application of Kleene's Fixed Point Theorem to Dynamic Programming: A Noteh
International Journal of Economic Theory
In this note, we
show that the least fixed point of the Bellman operator in a certain set can be
computed by value iteration whether or not the fixed point is the value
function. As an application, we show one of the main results of Kamihigashi
(2014, ``Elementary results on solutions to the Bellman equation of dynamic
programming: existence, uniqueness, and convergence," Economic Theory 56,
251--273) with a simpler proof.
June
2014
Yin-Wong
Cheung (City University of Hong Kong) and Eiji Fujii (Kwansei Gakuin
University)
gThe Penn Effect within a Country – Evidence from Japanh
Oxford Economic Papers
To
control for product quality and exchange rate effects, we use the Japanese
regional data to study the Penn effect – the positive relationship between
price and income levels. Comparable with the evidence from international data,
the Penn effect is significant in the Japanese prefectural data and driven
mainly by the prices of nontradables. We draw upon studies of productivity and
economic density to explain the positive price-income relationship, and find
that the empirical economic density variables explain the variability of the
Japanese prefectural (relative) prices quite well.
Akihiko
Yanase (Nagoya University)
gIndeterminacy
and Pollution Haven Hypothesis in a Dynamic General Equilibrium Modelh
Open Economies
Review
This paper
develops a two-sector dynamic general equilibrium model of a small open economy
in which production activities are accompanied by pollution emissions that have
a negative effect on welfare. It is shown that the dynamic equilibrium may
display indeterminacy (i.e., continuum of dynamic equilibrium paths converging to
a common steady state), depending on (i) the relationship between capital
intensity and pollution intensity, (ii) the property of householdsf discount
rate as a function of total pollution, and (iii) the pollution-consumption
relationship in instantaneous utility. In addition, the effect of environmental
policy on the economyfs comparative advantage and its relation to indeterminacy
are examined.
Akihiko
Yanase (Nagoya University)
gCorporate
Environmentalism in Dynamic Oligopolyh
Strategic Behavior
and the Environment
This study
investigates how an increase in the firms' environmental consciousness affects
the environment and economic welfare in the presence of dynamic oligopolistic
competition where firmsf objective may include the society's damage from stock
pollution as well as their profits. If all firms are symmetric, an increase in
the environmental consciousness reduces consumer surplus and social welfare in
the short-run. However, profits may increase if the firms are initially less
environmentally conscious. The long-run effects are similar to the short-run
ones except for the effect on social welfare because pollution stock is reduced
in the steady state. In the case of asymmetric firms, an increase in the
polluting firms' environmental consciousness reduces their output whereas it
increases the clean firms' output. The clean firms become better off, but
depending on the relative number of polluting firms versus clean firms, the
polluting firms' profits may increase or decrease.
Akihiko
Yanase (Nagoya University)
gFree
Trade may Save a Renewable Resource from Exhaustionh
Economics Bulletin
This study
considers a small open economy in which two tradable final goods are produced
by using a non-tradable resource good, which has an open-access property, as an
input as well as a primary factor. If the intrinsic growth rate of the resource
is relatively low, there may be no non-trivial steady state or multiple steady
states. This implies that, by opening international trade, the economy can
escape from the risk of complete depletion of the resource.
May
2014
Yasushi Kawabata
(Nagoya City University) and Yasuhiro Takarada (Nanzan University)
gWelfare
Implications of Free Trade Agreements under Bertrand and Cournot Competition
with Product Differentiationh
International
Economics
This study examines the effects of free trade agreements (FTAs) on the
welfare of both member and nonmember countries and the incentives for
multilateral free trade in a three-country model of Bertrand and Cournot
competition in differentiated oligopolies. First, we demonstrate that an FTA
increases the welfare of all member and nonmember countries in both Bertrand
and Cournot competition with product differentiation. Second, we show that if
products are nearly perfect substitutes, an FTA may hamper the incentive of a
nonmember country to support multilateral trade liberalization with Bertrand
competition, which sharply contrasts with the case of Cournot competition.
Kenta
Tanaka, Keisaku Higashida, and Shunsuke Managi
gA Laboratory Assessment of the Choice of Vessel Size under Individual
Transferable Quota Regimesh
Australian Journal of Agricultural and
Resource Economics
This
paper examines the effect of individual transferable quota regimes on
technology choice, such as choice of vessel size, by using the laboratory
experiment method. We find that even if vessel sizes change over time, the
quota price can converge to the fundamental value conditioned on the vessels
chosen. We also find that subjects choose their vessel type to maximize their
profits based on the quota trading prices in the previous period. This result
implies that the efficiency of quota markets in the beginning period is
important because any inefficiency in quota markets may affect vessel sizes in
ensuing periods. Moreover, we find that the initial allocations may
significantly influence vessel sizes through two channels: first, a higher
initial allocation to a subject increases the likelihood that the subject
invests in a large-sized vessel; second, the quota price may be higher and more
unstable under unequal allocation than under equal allocation; thus, whether
the allocation is equal influences subjectsf choice of vessel type.
Keisuke Hattori and Keisaku Higashida
gMisleading Advertising and Minimum Quality Standardsh
Information
Economics and Policy
This
paper examines the relationship between misinformation about product quality
and quality standards, such as minimum quality standards (MQSs) and
certification criteria, when products are vertically differentiated in terms of
their health/safety aspects. We investigate the welfare effect of regulating
misinformation and strengthening MQSs. We find that the welfare effect of a
decrease in misinformation crucially depends on the existing amount of misinformation;
moreover, a more stringent MQS either improves or deteriorates welfare. Two
effects figure strongly throughout our results. First, changes in
misinformation and/or an MQS make price competition between firms more or less
serious, causing changes in price and quantity. Second, these changes influence
some consumers' choices, leading them to change the products that they
purchase. This change in consumption behavior increases or decreases
inappropriate choices when misinformation is present. We extend the analysis to
the case in which a high-quality firm's quality investment is endogenously
determined.
Naoto
Jinji (Kyoto University)
gComparative Statics for Oligopoly: A Generalized Resulth
Economics Letters
We
perform comparative statics for a general model of asymmetric oligopoly and
derive a concise formula for the response of one firm to a marginal change in
its rival's strategic variable, taking into account the responses of all other
firms. We obtain the conditions under which the sign of this response coincides
with that of the mixed second-order partial derivative of the firm's payoff
function. We then propose a distinction between gross and net strategic
relationships (i.e., strategic substitute and complement).
Takeo
Hori, Masako Ikefuji and Kazuo Mino
gConformism and Structural Changeh
International Economic Review
Using
a simple, multi-sector model of endogenous growth, we show that
commodity-specific consumption externalities can be a source of structural
change. When the degrees of consumption externalities are different between
goods, each sector grows at a different rate. However, the aggregate economy
exhibits balanced growth in that capital stock and expenditure grow at the same
constant rate. A three-sector version of our model may reconcile Kaldorfs
stylized facts with empirically plausible profiles of industrial structure
transformation.
April
2014
Noriaki
Matsushima (ISER Osaka University) and Kazuhiro Takauchi (Kansai University)
gPort
Privatization in an International Oligopolyh
Transportation Research Part B:
Methodological
We investigate the
effects of port privatization on port usage fees, firm profits, and welfare.
Our model consists of an international duopoly with two ports and two markets.
When the unit transport cost is high, port privatization reduces port usage
fees, although neither government has an incentive to privatize its port. The
equilibrium governmental decisions are inconsistent with the desirable outcome
if the unit transport cost is not high enough. The government of the smaller
country, in terms of market size, is more likely to privatize its port, and the
government of the larger country is more likely to nationalize its port to
protect its domestic market.
Angus
C. Chu (University of Liverpool), Guido Cozzi (University of St. Gallen), and
Yuichi Furukawa (Chukyo University)
gEffects
of Economic Development in China on Skill-Biased Technical Change in the USh
Review
of Economic Dynamics
In
this study, we explore the effects of a change in unskilled labor in China on
the direction of innovation in the US by incorporating production offshoring
into a North-South model of directed technical change. We find that
intellectual property rights (IPRs) and offshoring are different ways for the
labor endowment of the South to affect the size of the market for innovations
in the North. Absent offshoring and lacking IPRs in the South - as in China in
the early 1980s - an increase in Southern unskilled labor should lead to
skill-biased technical change. If instead offshoring is present and/or IPRs are
better enforced (as in China in more recent times), then a decrease in
unskilled labor in the South should lead to skill-biased technical change.
Furthermore, an increase in Southern per capita stock of capital reduces offshoring
and also leads to skill-biased technical change. Calibrating the model to
China-US data, we find that under a moderate elasticity of substitution between
skill-intensive and labor-intensive goods, the decrease in unskilled labor and
the increase in capital in China can explain about one-third of the recent
increase in the skill premium in China through skill-biased technical change in
the US.
March
2014
Flora
Bellone, Kozo Kiyota, Toshiyuki Matsuura, Patrick Musso, and Lionel Nesta
gInternational Productivity Gaps and the Export Status of Firms: Evidence from
France and Japanh
European Economic Review
This
paper provides new evidence on international productivity gaps; This evidence
is obtained from large-scale firm-level data from the French and Japanese
manufacturing industries using non-parametric methodologies designed to
overcome confidentiality restrictions. Our primary finding is that
international productivity gaps are sensitive to the export status of firms. We
also show that productivity differences between French and Japanese exporters
vary across export destinations. We propose a simple analytical framework to
relate those basic findings to the new models of international trade with
heterogeneous firms. Under this framework, international firm-level
productivity comparisons provide new insights into the importance of
trade-related institutional and policy differences across countries.
Doan
Thi Thanh Ha, and Kozo Kiyota
gFirm-level Evidence on Productivity Differentials and Turnover in Vietnamese
Manufacturingh
Japanese Economic Review
This
paper examines the relationship between productivity differentials and firm
turnover in Vietnamese manufacturing. We utilize firm-level data between 2000
and 2009, including the year 2007, when Vietnam joined the World Trade
Organization (WTO). Our major findings are twofold. First, the productivity of
entrants, survivors, and exiters increased simultaneously from 2006 to 2007.
This result suggests that the cutoff productivity level increased after trade
liberalization. Second, the resource reallocation between firms was facilitated
after the liberalization. These findings are consistent with the implications
of the recent models of international trade and firm heterogeneity.
February
2014
Yoshinori Kurokawa (University of Tsukuba)
gA Survey of Trade and Wage Inequality: Anomalies, Resolutions, and New Trendsh
Journal of Economic Surveys
This paper surveys recent
studies on trade and wage inequality. We first introduce some trade-based
explanations for increased wage inequality. There are, however, a number of
criticisms of this line of thought based on the "trade-wage inequality
anomaly," the "price-wage anomaly," and the small volume of
trade. Mainly due to these criticisms, trade-based explanations for rising wage
inequality have been limited in the economic literature. Rather, the primary
explanations for wage inequality have been based on skill-biased technological
change. Some trade models, however, have weakened the
above criticisms, and more economists now argue that the effect of trade,
though relatively small compared to that of technological change, is more
significant than generally believed. Finally, we attempt to link new trends in
inequality, such as job polarization and within-group inequality, to the trade
and wage inequality literature.