The relationship between governance structure and risk management approaches in Japanese venture capital firms

This paper attempts to understand what drives Japanese venture capital (JVC) fund managers to select either active managerial monitoring or portfolio diversification to manage their firms' investment risks [J. Bus. Venturing 4 (1989) 231]. Unlike U.S. venture capitalists that use active managerial monitoring to gain private information in order to maximize returns [J. Finance 50 (1995) 301], JVCs have traditionally used portfolio diversification to attenuate investment risks [Hamada, Y., 2001. Nihon no Bencha Kyapitaru no Genkyo (Current State of Japanese Venture Capital), Nihon Bencha Gakkai VC Seminar, May 7]. We found that performance pay is positively related to active monitoring and that management ownership is positively related to active monitoring and negatively related to portfolio diversification. The managerial implication of our study is that venture capitalists should be as concerned about the structure of their incentive systems for their fund managers as they are for their investee-firm entrepreneurs. Agency theory says that contingent compensation is a self-governing mechanism for individual effort that is difficult to measure and verify. When properly applied, equity ownership and performance-based pay can have powerful influencing effects on the strategic choices of managers.     

Trade with Time Zone Differences: Factor Market Implications

The main purpose of this study is to illustrate, with a simple two‐factor (skilled and unskilled labor) model, how a time‐saving improvement in business‐services trade benefitting from differences in time zones can have an impact on national factor markets. In doing so, we intend to capture the situation where the night‐shift work in one country is replaced by the day‐shift work in another country. In other words, we will show that trade with time zone differences will result in shifts of the relative supplies and demands for skilled labor around the globe.     

NETWORK EXTERNALITIES AND COMPARATIVE ADVANTAGE

In this article, I examine how the network externalities of communications activities and trading opportunities interact to determine the structure of comparative advantage. These interactions are examined by constructing a two‐country, three‐sector model of trade involving a country‐specific communications network sector. The role of the connectivity of network providers, which allows users of a network to communicate with users of another network, is also explored.     

Interconnectivity of communications networks and international trade

Abstract In this study a multi‐country model of trade is developed that captures the role of country‐specific communications network interconnectivity, which enhances trade in intermediate business services. The number of countries connected to internationally interconnected networks is found to determine the structure of comparative advantage. That is, countries with interconnected networks have a comparative advantage in the good that requires business services provided via networks. In connected countries, producers of that good benefit from the efficient transmission of business services. This research also demonstrates that countries whose country‐specific networks are not connected to the interconnected networks may become worse off as the result of trade. JEL Classification: D43, F12
Interconnectivité des réseaux de communication et commerce international Ce mémoire développe un modèle de commerce international impliquant plusieurs pays qui cerne le rôle de l'interconnectivité des réseaux de communication de chaque pays. Cette interconnectivité enrichit les flux de commerce dans les services intermédiaires d'affaires. Il appert que le nombre de pays connectés aux réseaux internationalement connectés détermine la structure de l'avantage comparatif. Ce qui veut dire que les pays qui ont des réseaux interconnectés ont un avantage comparatif dans le bien qui requiert les services d'affaires fournis par les réseaux. Dans les pays connectés, les producteurs de ces biens bénéficient de la transmission efficace de ces services d'affaires. La recherche montre aussi que les pays dont les réseaux nationaux ne sont pas connectés aux réseaux interconnectés peuvent voir leur situation s'empirer en conséquence du commerce international.     

Estimation of time-varying price elasticity in 1970–1997 Japanese raw milk supply by structural time-series model

The price elasticity of raw milk supply in Japan is estimated over time by a structural time-series model in state space form, and the changes in elasticity are tested by the diagnosing test of de John and Penzer in 1998. The supply function is modeled with a local linear trend and a strictly exogenous autoregressive distributed lag price. The seasonality in the data is adjusted by a structural time-series model. In the 1970–1997 period, there were major dairy policy changes in Japan: a production adjustment, related penalties, and two-tier pricing. Hokkaido is the region that mainly provides the supply of raw milk for milk products, while Tofuken is the region that mainly produces drinking milk. The estimated price elasticity in Hokkaido became stable after imposition of the production adjustment. On the other hand, price elasticity in Tofuken became stable after the inflation of the mid-1970s. Price elasticity is estimated to be more inelastic as well as more likely to converge in inelasticity in Hokkaido than in Tofuken. We discuss the relationship between changes in dairy policy and changes in price elasticity.     

Virtual integration and endogenous growth in the world economy

This study develops a three-country model of endogenous growth that captures the role of the interconnection of country-specific communications networks (i.e., virtual integration), which affects the productivity of R&D activity through an increase in stock of knowledge capital. The number of countries connected to internationally interconnected networks is found to determine the structure of dynamic comparative advantages. That is, countries with interconnected networks have a dynamic comparative advantage in differentiated products that require communication and activities. In the connected countries, researchers gain from efficient activity through the utilization of the greater stock of knowledge capital. The author acknowledges the comments from the participants at the 56th International Atlantic Economic Conference, held October 16–19, 2003, in Quebec City, Canada. The author is also grateful to the anonymous referee of this journal for helpful comments and suggestions.     

A New Dynamic Trade Model of Increasing Returns and Monopolistic Competition

This paper formulates a two‐country by two‐factor by two‐good dynamic Chamberlin–Heckscher–Ohlin model of international trade with endogenous time preferences. After proving the existence, uniqueness and local saddle‐point stability of the steady state, we examine the relationship between initial factor endowment and trade patterns in the steady state. It will be shown that (i) given that the representative household in each country supplies an equal amount of labor, only intra‐industry trade occurs in the steady state and (ii) other things being equal, the country with higher labor efficiency becomes the net exporter of the labor‐intensive good.