Estimating noncooperative and cooperative models of bargaining: an empirical comparison

This paper examines the issue of model selection in studies of strategic situations. In particular, we compare estimation results from a noncooperative formulation of government formulation à la (Baron and Ferejohn in Am Poli Sci Rev 87:34–47, 1989) with those from two alternative cooperative formulations (Nash in Econometrica 18:155–162, 1950; Shapley and Shubik in Am Poli Sci Rev 48:787–792, 1954). Although the estimates of the ministerial ranking are similar, statistical testing suggests that the noncooperative formulation is best fitted to the observed data among the alternative models. This result implies that modeling the noncooperative structure in bargaining situations is crucially important at the risk of possibly misspecifying the details of the game.     

Which firms benefit from market making?

Financial Markets and Portfolio Management - From 1998 until 2008, all firms on the JASDAQ exchange could choose and switch between a market-maker method similar to NASDAQ and a continuous auction...     

Cost-effectiveness of intravitreal aflibercept versus other treatments for wet age-related macular degeneration in Japan

Objective: This analysis estimated the cost-effectiveness of intravitreal aflibercept injection(s) (IAI) for wet age-related macular degeneration (wAMD) compared with other treatments in Japan.

Methods: This was a cost-utility analysis based on published data. A state-transition cohort model was constructed with six health states based on best-corrected visual acuity in the better-seeing eye. The cycle time was 4 weeks, and the time horizon was 12 years. The model compared IAI 2?mg every 8 weeks (2q8) for 2 years after three initial monthly injections, ranibizumab as needed, ranibizumab 0.5?mg every 4 weeks (0.5q4), pegaptanib sodium 0.3?mg every 6 weeks, verteporfin photodynamic therapy (PDT), and best supportive care, assumed to include medical management and monitoring, but no active therapy. Costs (expressed as Japanese yen [JPY]) and quality-adjusted life years (QALYs) gained were estimated for each treatment and discounted at 2.0%. Input data were obtained from clinical studies, the Japanese drug tariff and social insurance reimbursement schedule, and expert opinion. The analysis was conducted from the societal perspective, including medical costs as well as costs of blindness.

Results: IAI 2q8 was dominant (i.e. more effective in terms of QALYs and less costly) to all other comparators (ranibizumab as needed, ranibizumab 0.5q4, pegaptanib sodium, PDT, and best supportive care), as shown by the incremental cost-utility ratio (i.e. cost per QALY gained).

Limitations: The strengths of the analysis include the wide range of comparators evaluated and the use of Japanese-specific utility data. The limitations include the use of one eye, inclusion of published data up to 2 years only, and assumptions on disease course over 5 years.

Conclusions: IAI 2q8 was more effective in terms of QALYs and less costly compared with other treatments for wAMD in Japan.     

Trade liberalization in a differentiated duopoly reconsidered

Constructing a model of differentiated Cournot duopoly, we consider welfare effects of trade liberalization (i.e. reductions in transport costs). We examine both multilateral trade (i.e. the firms in both countries export bilaterally) and unilateral trade, under which foreign entry is possible but the home firm cannot export. Some new results on trade gains under differentiated oligopoly are proved and their implications are discussed.     

Does free trade promote environmental technology transfer?

We investigate how environmental and trade policies affect the transfer of environmental technology in a two-country model with global pollution. By comparing free trade and tariff policy with or without commitment, the following results are obtained. First, firms avoid the implementation of environmental tax by contracting technological transfer. Second, there is a case in which free trade is preferable to a tariff policy for both countries when there is no commitment to a tariff level. Third, free trade is not Pareto-preferred to a tariff policy when there is a commitment.     

Dynamic Interactions in Trade Policy in a Differential Game Model of Tariff Protection

This paper develops a two‐country dynamic game model of tariff protection to reconsider optimal trade policies and their implications for welfare. The authors show that an import subsidy is optimal in the feedback Nash equilibria, which results in a curious possibility that the domestic market is monopolized by the foreign firrm. However, welfare comparisons among Nash equilibria, free trade, and autarky reveal that feedback Nash equilibria involve higher welfare than both autarky and free trade, i.e. dynamic noncooperative choices of policy serve as tacit policy coordination and ensure larger trade gains relative to free trade.     

A framework for estimating willingness-to-pay to avoid endogenous environmental risks

This paper proposes a general empirical strategy to estimate willingness-to-pay (WTP) for exogenous risk mitigation when environmental risks are endogenous in protective actions and consumers are imperfectly informed about the ambient risk levels. The strategy consists of a set of survey techniques and the dummy endogenous variable model (Heckman, 1978) to control for correlation in unobserved errors that enter the WTP equation and the protection-decision equation. The method is applied to the non-market valuation survey data on arsenic contamination in drinking water. Our results indicate that the estimated WTPs are significantly higher for households without self-protective action. Our approach thus offers not only the correct welfare estimate for exogenous reduction of environmental risks, but also yields policy implications qualitatively much different from the conventional approach. We also estimate the welfare value of the policy to inform and educate the public about the arsenic risk simultaneously with public risk mitigation. The estimated welfare value is similar to, though slightly higher than, that of risk mitigation without information component. This occurs due to the competing effects of information dissemination and risk mitigation efforts.     

Factors determining residents’ preparedness for floods in modern megalopolises: the case of the Tokai flood disaster in Japan

This study examines how flood risk perception and home ownership affect residents’ preparedness for floods, focusing specifically on the case of the Tokai flood disaster in Nagoya City, one of Japan’s biggest metropolises, in 2000. The greatest rainfall ever recorded in Nagoya City (566.5 mm) occurred on 11–12 September 2000; as a result, a local river burst its banks and flooded the city. A survey was conducted of residents of the affected area in Nagoya City and its adjacent region. The respondents were asked to rate the extent of their experience with, anticipation of, and preparedness for floods before and after the Tokai disaster in terms of taking special measures against floods. The results showed that the degree of preparedness for floods was determined by the level of fear of floods and the amount of damage sustained during the Tokai flood, especially for homeowners. However, the residents’ preparedness did not depend on their anticipation of floods. These findings show that preparedness for floods depends on ownership of a home, fear of flooding, and the amount of damage from previous floods rather than on previous experience with and anticipation of floods.     

A trade and domestic tax reform in imperfectly competitive markets

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.