A Dynamic Analysis of Multiple-Center Formation in a City

An optimizing model of urban land development is presented where formation and growth processes of subcenters are described. The model determines the location of new firms and households so as to maximize the net rental revenue from land over the planning horizon. The conditions on parameter values for which subcenters can be formed are investigated by the simulation method. Furthermore, how the optimal subcenter location varies in response to changes in relevant parameters is examined.     

Product Liability: Beyond Class Action

Can punitive product liability enhance economic efficiency? A very simple economic theory, assuming that the probability and the degree of product dissatisfaction are functions only of the producer's not of the consumer's effort, is modelled and analysed in this paper. The qualitative conclusion hinges critically upon whether the legal liability is reflected on price determination. If the price of the product is insensitive to product liability legislation, then punitive liability beyond the class action (i.e., compensatory payments more than proportional representation of potentially dissatisfied consumers) can induce socially desirable levels of effort exerted by the producer firm. This affirmative effect disappears if the price fully reflects all the expected legal liabilities, whereby punitive liability tends to reduce economic efficiency by encouraging costly lawsuit.     

How Did the Dollar Peg Fail in Asia?

In this paper, we have constructed a theoretical model in which the Asian firm maximizes its profit, competing with the Japanese and the U.S. firms in their markets. The duopoly model is used to determine export prices and volumes in response to the exchange rate fluctuations vis-à-vis the Japanese yen and the U.S. dollar. Then, the optimal basket weight that would minimize the fluctuation of the growth rate of trade balance was derived. These are the novel features of our model. The export price equation and export volume equation are estimated for several Asian countries for the sample period from 1981 to 1996. Results are generally reasonable. The optimal currency weights for the yen and the U.S. dollar are derived and compared with actual weights that had been adopted before the currency crisis of 1997. For all countries in the sample, it is shown that the optimal weight of the yen is significantly higher than the actual weight.J. Japan. Int. Econ.,Dec. 1998,12(4), pp. 256–304. Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo 186, Japan; Department of Commerce, Hitotsubashi University, Kunitachi, Tokyo 186, Japan; Department of Commerce, Takachiho University, Suginami, Tokyo 168, Japan.Copyright 1998 Academic Press.Journal of Economic LiteratureClassification Numbers F31, F33, O11.     

Strategic Choice of Quantity Stickiness and Stackelberg Leadership

This paper re‐examines endogenous Stackelberg leader–follower relations by modelling an explicitly dynamic market. We analyze a twice‐repeated duopoly where, in the beginning, each firm chooses either a quantity‐sticky production mode or a quantity‐flexible production mode. The size of the market becomes observable after the first period. In the second period, a firm can adjust its quantity if and only if it has adopted the flexible mode. Hence, if one firm chooses the sticky mode whilst the other chooses the flexible mode, then they respectively play the roles of a Stackelberg leader and a Stackelberg follower in the second marketing period. Somewhat intriguing is the finding that such a Stackelberg‐like equilibrium can arise only when the relative weight of the pre‐Stackelberg first marketing period is sufficiently high, with time preferences being sufficiently strong.     

PRECAUTIONARY DEMAND FOR LABOUR AND FIRM SIZE

This paper studies firms' job creation decisions in a labour market with search frictions. A simple labour market search model is developed in which a firm can search for a second employee while producing with a first worker, and this creates the equilibrium size distribution of firms. A firm expands employment even if the instantaneous payoff to a large firm is less than that of staying small – a firm has a precautionary motive to expand its size. In addition, this motive is enhanced by a greater market tightness. Because of this effect, firms’ decisions become interdependent – a firm creates a vacancy if it expects other firms to do the same, creating strategic complementarity among firms and thereby self‐fulfilling multiple equilibria. An increase in productivity can cause a qualitative change in labour market tightness and the rate of unemployment.     

Strategic Quality Decisions by Heterogeneously Informed Suppliers — The Role of "Noise Consumers"—

In a differentiated oligopoly market, it is often the case that consumers' ex post preferences over different product qualities depend upon the state of nature which is not yet observable to the consumers at the time of purchase. One of the most typical examples is a market for durable goods or long-term service contracts, where the state is indeed a future state which has not yet realised when the transaction is made. To analyse such situations, this paper models a two-stage game, in which multiple suppliers move first to choose the quality of their products based upon their idiosyncratic information about the state. Consumers then observe these products, update their beliefs about the state, and decide which products to purchase. Counterintuitively, suppliers' incentives to reveal their private information are higher when there is a fraction of consumers whose prior about the state is moderately inaccurate, than when every consumer has better prior information. Hence the presence of such "noise consumers" can make all consumers better off, even including noise consumers themselves.     

Conservation Auctions and Compliance: Theory and Evidence from Laboratory Experiments

Many agri-environmental conservation programs are faced with the problem of imperfect monitoring. This provides farmers with an incentive for noncompliance, because they can receive subsidies without implementing the conservation scheme. In this paper, bidding behavior and auction performance are compared for discriminatory-price and uniform-price auctions in an imperfect monitoring environment. Our theoretical analysis suggests that auction performances are equalized between the discriminatory-price and uniform-price auctions. However, laboratory experiments reveal that, although the discriminatory-price auction has an advantage in terms of reducing policy costs, it is more likely to cause adverse selection. As a result, the uniform-price auction tends to have higher efficiency and cost-effectiveness when compliance behavior is taken into account.     

Transportation system change and urban structure in two-transport mode setting

This paper analyzes the impacts of a transportation system change on urban spatial structure in the case where there are two competitive transport modes. Furthermore the effect of improvement of the transportation system on users' welfare is examined and compared between two modes.     

An empirical analysis of linear aggregation problems: The case of investment behavior in Japanese firms

Some economists have analysed empirically linear aggregation problems from various view-points and get results which seem to justify the use of aggregated data. However, some were based on only one experiment. Using more experiments we shall analyse empirically two important aggregation problems for the case of the investment behavior of firms. In contrast to earlier studies, our results indicate that the aggregation biases of macroparameters are rather large and the explanatory power of the macroequations is not necessarily higher than that of a sum of microequations.