Public investment criteria under optimal nonlinear income taxation without commitment

In this study, we highlight that the incredibility of the government's commitment to a certain tax policy is a determinant of production inefficiency. We show that if the government cannot commit to a certain tax policy and if the types of taxpayers are completely separated, then the production efficiency theorem could be violated in an optimal solution. In this case, an incremental unit of public or private capital affects taxpayers' labor supply through wage rates. In a situation where public capital is more (less) complementary to labor than private capital, public investment tightens (relaxes) the incentive compatibility constraint more than private investment.     

Collusion and heterogeneity of firms

We examine the impact of heterogeneous discounting on collusion in dynamic Bertrand competition. We show exactly when collusion can be sustained and how collusion would be organized efficiently with heterogeneous discounting. First, we show that collusion is possible if and only if the average discount factor exceeds a certain threshold, with or without capacity constraints. Next, we identify a dynamic pattern of market share that characterizes efficient collusion and obtain the unique long‐run prediction despite the presence of multiple equilibria. In the long run, the most patient firm and the most impatient firm tend to dominate the market.     

REPORTING GUIDELINES FOR META-ANALYSIS IN ECONOMICS

Meta-analysis has become the conventional approach to synthesizing the results of empirical economics research. To further improve the transparency and replicability of the reported results and to raise the quality of meta-analyses, the Meta-Analysis of Economics Research Network has updated the reporting guidelines that were published by this Journal in 2013. Future meta-analyses in economics will be expected to follow these updated guidelines or give valid reasons why a meta-analysis should deviate from them.     

Note on Dynamic Growth of Catch-up Capitalism in Japan: Enterprise Networking and its Relevance

Abstract: This note discusses the factors behind the rapid economic development of Japan this century. Japan's experience as a latecomer in industrialisation has attracted considerable interest in both developed and developing countries, especially after the recent dynamic waves of industrial development in East and South East Asia. While Japan initially adopted a strategy of borrowing knowledge from the backlog of that accumulated among industrialised predecessors, it did not remain an imitator for long, but made a variety of institutional and organisational innovative changes to the original capitalist model. In this note, we argue that one of the most critical innovations has been the creation of enterprise networking which is a system of inter-firm linkages through which market transactions are internalised within a web of enterprises based on division of production processes. We also suggest that these enterprise networks are not, as is sometimes argued, unique to Japanese culture, but that they should be an indispensable part of institutional capacity building in any country. Many developing countries could, therefore, benefit from organising their small formal and informal sector firms into networks of production activities. Résumé: Dans cet article, l'auteur analyse les facteurs sous-jacents à la rapide expansion économique que le Japon a connue au cours de ce sièecle. L'expérience du Japon, tard-venu à l'industrialisation, a suscité un intérèt considerable tant dans les pays développés que dans les pays en développement, notamment aprés les récentes et puissantes vagues de développement industriel en Asie de l'est et du sud-est. Certes, la stratégie initialement adoptée par le Japon a consistéà“emprunter” la somme de connaissances accumulée par ses devanciers dans le processus d'industrialisation, mais il n'a pas conservé longtemps le statut d'imitateur, apportant au contraire diverses innovations institutionnelles et organisationnelles au modéle capitaliste d'origine. L'auteur fait valoir que l'une des innovations les plus fondamentales a été la création des réseaux d'entreprises, système de liaisons permettant d'internaliser les transactions de marché‘ au sein d'un réseau d'entreprises sur la base d'une division des processus de production. Par cette analyse, l'auteur fait valoir que ces réseaux d'entreprises ne dénotent pas, comme on le prétend parfois, une caractéristique particuliére de la culture japonaise, mais qu'ils devraient constituer une composante indispensable du processus de renforcement des capacités institutionnelles dans tous les pays. Par conséquent, de nombreux pays en développement pourraient, avec profit, organiser les petites entreprises de leur secteur structuré et de leur secteur informel en des réseaux d'activités de production.     

The Evolution of Japan's Aggressive Legalism

Japan's recent trade policy is sometimes characterised as ‘aggressive legalism’ in the sense that it aggressively utilises the multilateral trade rules embodied in the Marrakesh Agreement Establishing the World Trade Organisation in dealing with disputes with its trade partners. This policy may appear to be a marked departure from Japan's past practice of favouring bilateral, non‐legal settlement of trade disputes. Upon closer examination, however, while Japan has been moderately active in using the WTO dispute settlement process for resolving its trade disputes, it behaves more like a country that resorts to surgical strikes on selected targets (usually the United States) under a powerful cover of the European Community. Compared to Japan, Korea's attitude in the WTO is more aggressive. While the Japanese Ministry of Economy, Trade and Industry (METI) is not content with the status quo and is seeking to expand its aggressiveness in the WTO dispute settlement mechanism, it faces an uphill battle. One of the difficulties facing trade officials in Japan may be the lack of a national system for lodging WTO complaints, open to any citizens or firms, like Section 301 of the US Trade Act of 1974 or the European Trade Barriers Regulation. Nonetheless, in the historical context, Japan is far more aggressive than in the past in utilising the rules of the GATT/WTO to advance its national interests. It will never revert to the infamous practice of bilateralism and grey area measures.     

The determinants of corruption in transition economies

This paper examines the determinants of corruption in transition economies. We found that the progress of structural reform, comprising marketization, rule of law, and democratization had a crucial impact on the extent of corruption control in former socialist countries.     

International spillovers of R&D and marginal social returns

This study analyzes marginal social and private returns of R&D investment through the impact of international spillovers of R&D stocks. We compare the marginal social with marginal private returns using data of 27 OECD and EU countries from 1995 to 2008. We consider two channels of R&D spillovers: embodied in trade flows and disembodied by bilateral technological proximity. We find that marginal social returns on R&D are much larger than the marginal private returns for R&D‐intensive countries, in the embodied spillover channel. We also find that the embodied spillover channel through import flows is more important than the disembodied channel.     

The determinants of board composition in a transforming economy: Evidence from Russia

Using a unique dataset of 730 joint-stock companies, we studied the determinants of corporate board composition in Russia. Despite the widespread image of insider control in the 1990s, a large number of Russian companies now actively appoint outsider directors to monitor top management. The findings reported in this paper strongly suggest that the theories and empirical methods of financial and organizational economics help to pinpoint the factors affecting the extent of outsider directorship. We also found that, among potential determinants, bargaining variables have considerable explanatory power. Furthermore, our empirical evidence demonstrated that Russia's legal system and its peculiarities as a transition economy also exert a certain degree of influence on board composition.     

An artificial Wicksell–Keynes economy integrating short-run business cycle and long-term cumulative trend

Journal of Economic Interaction and Coordination - Economists have investigated how price–wage rigidity influences macroeconomic stability. A widely accepted view asserts that increased...     

The governance mechanism of Russian firms: its self-enforcing nature and limitations

The legal form of business enterprises in contemporary Russia is diversified to almost the same extent as those in major advanced countries. Joint-stock companies are now the most common form of incorporation among leading industrial enterprises. The law on joint-stock companies in Russia provides for the governance mechanism of joint-stock companies, in order to implement the concept of a ‘self-enforcing’ organisation in which the legal code of business management should be observed voluntarily by managers and large stockholders. This fundamental idea is embodied in many aspects of the current system, including the mechanism of management and supervision characterised as ‘diarchial leadership’, the balance of power between stockholders and corporate officers, and the internal audit system. However, the self-enforcing nature of the Russian enterprise has been undermined by a number of factors, including the overwhelming expansion of closed joint-stock companies, the predominance of insider ownership, the short history of internal auditing and the lack of legal enforcement power. As a result, breaches of company law are rampant in Russia today. This raises serious problems for the Russian corporate system, along with the legal peculiarity of privatised firms and people's enterprises, which complicates the system of joint-stock companies and deprives it of transparency.