2018
Takumi Naito Review
of International Economics
Eiji Fujii Oxford Bulletin
of Economics and Statistics
Kenji Fujiwara B.E.
Journal of Theoretical Economics
Kazuhiro Takauchi and Tomomichi Mizuno International Review of Economics and
Finance
Tsuyoshi Toshimitsu Managerial and Decision
Economics
Sabien Dobbelaere and Kozo
Kiyota Labour Economics
Arghya Ghosh and Jota
Ishikawa Review of International
Economics
Angus C. Chu, Guido Cozzi,
Yuichi Furukawa, and Chih-Hsing Liao Journal of
Money, Credit, and Banking
Tamaki Morita, Keisaku Higashida, Yasuhiro Takarada, and
Shunsuke Managi Resources Policy
December 2018
Takumi Naito (Waseda University)
“A larger country sets a lower optimal tariff”
Review of International Economics
We develop a new optimal tariff theory which is consistent with the fact that a
larger country sets a lower tariff. In our dynamic Dornbusch-Fischer-Samuelson
Ricardian model, the long-run welfare effects of a rise in a country's tariff
consist of the direct revenue, indirect revenue, and growth effects. Based on
this welfare decomposition, we obtain two main results. First, the optimal
tariff of a country is positive. Second, the optimal tariff of a country is
likely to be decreasing in its absolute advantage parameter, implying that a
larger (i.e., more technologically advanced) country sets a lower optimal
tariff.
October
2018
Eiji Fujii (Kwansei Gakuin University)
“What Does Trade Openness Measure?”
Oxford Bulletin of Economics and
Statistics
An empirical measure of trade openness is
defined as the ratio of total trade to GDP, and represents a convenient
variable routinely used for cross-country studies on a variety of issues.
However, the effects that the crude measure captures remain ambiguous, making
it difficult to interpret the empirical results. Drawing on several strands of
the literature, this study examines the informational content of the trade
openness measure using intranational and
international data. We find that, even for fully integrated economies within a
country, trade openness is approximately half as variable as it is for
segmented diverse countries around the world. The information it conveys is
better characterized as the extent of the economic remoteness and idiosyncratic
distribution of sectoral production. The cross-country variation of trade
openness derives more from the variability in GDP than trade.
September 2018
Kenji Fujiwara (Kwansei
Gakuin University)
“The Effects of Entry when Monopolistic Competition and Oligopoly Coexist”
B.E. Journal of Theoretical Economics
This paper proposes a model of a continuum of industries in which some
industries are monopolistically competitive, the others are oligopolistic, and
they interact in a labor market. We use this model to examine the effects of
entry of oligopolistic firms. We show that this raises the equilibrium wage and
induces exit of monopolistically competitive firms. Then, we find that the
profits of each oligopolistic firm and the whole oligopolistic industry
decrease. Finally, we establish that if the elasticity of substitution is the
same in all industries, welfare improves as a result of an increase in the
oligopolistic firms.
August 2018
Kazuhiro Takauchi
(Kansai University) and Tomomichi Mizuno (Kobe
University)
“Solving a hold-up problem may harm all firms: Downstream R&D and
transport-price contracts”
International Review of Economics and
Finance
This study considers transport-price
contracts in a two-country duopoly model with firm-specific carriers. It is
well-known that when an upstream firm fails to commit to keeping its
transaction (or transport) price after a downstream firm's R&D investment,
it causes the hold-up problem and diminishes the incentive for R&D
investment. While previous literature emphasizes that the commitment to keep
the transaction price is needed to overcome the hold-up problem, we show that
this commitment may harm all firms. We also discuss the robustness of our
results in cases with R&D spillovers, product differentiation, and
non-linear production costs.
July 2018
Tsuyoshi Toshimitsu
(Kwansei Gakuin University)
“The optimal choice of internal
decision-making structures in a network industry: a multiproduct monopoly case”
Managerial and Decision Economics
Focusing on the role of network compatibility effects
between products of a multiproduct monopoly and on the form of consumer
expectation for network sizes, we consider the optimal choice of internal
decision-making structures, i.e., centralization and decentralization, and its
welfare effect in a network industry. We demonstrate that if the degree of
network compatibility effects is sufficiently large, the decentralized
decision-making is socially optimal. However, in the case of consumer ex
post expectations, it is optimal for the firm’s owners to choose the
centralized decision-making. We apply the model to the cases of price-setting
games, complementary products, and negative network externalities to examine
the optimal choice of internal decision-making structures.
June 2018
Sabien Dobbelaere (Vrije Universiteit Amsterdam) and Kozo Kiyota (Keio University)
“Labor Market Imperfections, Markups and Productivity in Multinationals and
Exporters”
Labour Economics
This paper examines the links between a
firm’s internationalization status and the type and degree of market
imperfections in product and labor markets. We develop a framework for
modelling heterogeneity across firms in terms of (i)
product market power (price-cost markups), (ii) labor market imperfections
(workers’ bargaining power during worker-firm negotiations or a firm’s degree
of wage-setting power) and (iii) revenue productivity. We apply this framework
to analyze whether the pricing behavior of firms in product and labor markets
differs across firms that engage in different forms of internationalization
using an unbalanced panel of 7,458 manufacturing firms over the period
1994-2012 in Japan. Engagement in international activities is found to matter
for determining not only the type of imperfections in product and labor markets
but also the degree of imperfections. Clear differences in behavior between firms
that serve the foreign market either through exporting or through FDI are
observed. Exporters are more likely to be characterized by imperfect
competition in the product market whereas the opposite holds for
multinationals. Exporters are more likely to share rents based on the
bargaining power of workers whereas a firm’s wage-setting power seems to
generate wage dispersion across firms with foreign subsidiaries.
May 2018
Arghya Ghosh
(University of New South Wales) and Jota Ishikawa (Hitotsubashi
University and RIETI)
“Trade liberalization, absorptive capacity
and the protection of intellectual property rights”
Review of International Economics
We examine how trade liberalization affects South's
incentive to protect intellectual property rights (IPR) in a North-South
duopoly model where a low-cost North firm competes with a high-cost South firm
in the South market. The North firm serves the South market through either
exports or foreign direct investment (FDI). The extent of effective cost
difference between North and South depends on South's imitation, which in turn
depends on South's IPR protection and absorptive capacity and North firm's
location choice, all of which are endogenously determined in our model. For a
given level of IPR protection, South's absorptive capacity under exports may be
greater than under FDI. Even though innovation is exogenous
to the model (and hence unaffected by South's IPR policy), strengthening IPR
protection in South can improve its welfare. The relationship between trade
costs and the degree of IPR protection that maximizes South welfare is
non-monotone. In particular, South has an incentive to
protect IPR only when trade costs are moderate. When masking technology or
licensing is incorporated into the model, however, some protection of IPR may
be optimal for South even if the trade costs are not moderate.
April 2018
Angus C. Chu (Fudan
University), Guido Cozzi (University of St. Gallen), Yuichi Furukawa (Chukyo University), and Chih-Hsing Liao (Chinese Culture University)
“Inflation and Innovation in a
Schumpeterian Economy with North-South Technology Transfer”
Journal of Money, Credit, and Banking
This
study analyzes how inflation affects innovation and international technology
transfer via cash-in-advance constraints on R&D. We consider a North-South
quality-ladder model that features innovative Northern R&D and adaptive
Southern R&D. We find that higher Southern inflation causes a permanent
decrease in technology transfer, a permanent increase in the North-South wage
gap, and a temporary decrease in the Northern innovation rate. Higher Northern
inflation causes a temporary decrease in the Northern innovation rate, a
permanent decrease in the North-South wage gap, and ambiguous effects on
technology transfer. Finally, we calibrate the model to China-US data to
perform a quantitative analysis.
Tamaki Morita (Yamanashi Prefectural University), Keisaku
Higashida (Kwansei Gakuin University), Yasuhiro Takarada
(Nanzan University), and Shunsuke
Managi (Kyushu University)
“Does Acquisition of Mineral Resources by Firms in Resource-Importing Countries
Reduce Resource Prices?”
Resources Policy
This study
theoretically and empirically examines how resource prices are affected when
firms in resource-importing countries acquire mineral resources. The study’s
theoretical examination considers a simple, two-period model that demonstrates
how firms acquiring mineral resources may raise either present or future
resource prices. This finding implies that resource consumption in either
period may decline. Strategic behavior of resource-mining firms, demand for
final goods, and extraction costs play key roles in this examination. Using a
dynamic panel model with oil price data, the study’s empirical portion
estimates how acquiring resources affects the price of oil. Results demonstrate
that prices in the present period rise, and prices in future periods decline.