OPTIMAL CAPITAL TAXES FOR PUBLIC GOOD PROVISION*

This paper constructs a general equilibrium trade model of a small open economy that produces many traded private goods and one non-traded public consumption good. Trade in goods is free, but the country taxes the internationally mobile capital to finance the provision of the public good. Within this framework, the paper identifies the conditions under which the optimal policy on the internationally mobile capital calls for a tax. Under the assumptions that (i) the welfare function is concave with respect to the tax rate, and (ii) the net revenue-maximizing capital tax rate is positive, it is shown that the marginal cost of the public good always understates its social marginal cost.     

论反垄断规则的优化设计*

近年来,来自经济理论的批评促使欧美法院与执法机构对搭售、转售价格维持等行为的判定从本身违法规则逐渐转向更依赖于实质效果的替代规则。但不同法院、执法机构与学界就本身违法规则的优化方案各执一词,鲜有文献探讨一个合理的优化设计应该考虑哪些因素,遵循哪些条件,对中国反垄断规则优化设计的一般性探讨更是凤毛麟角。本文试图在借鉴和拓展错判成本路径理论的基础上对此进行研究,提出以“动机安全港”为核心的反垄断规则优化方案,以兼顾判罚的准确性、优化的可操作性、规制成本、自由裁量权限制与法律的威慑作用。依据该优化方案,本文对最高法院在3Q案中提出的搭售规则进行了案例分析。     

OPTIMAL CONTRACTS FOR CENTRAL BANKERS AND PUBLIC DEBT POLICY*

We consider how the second‐best allocation corresponding to an optimal rule under the policy commitment of a central bank and a fiscal authority with a consolidated government budget constraint can be achieved, even though these authorities are unable to commit themselves to their optimal policies and ignore the strategic interaction between their policies. Our results show that the best practical institutional arrangement is to have an instrument‐independent central bank that controls the money supply to determine the rate of inflation and commits itself to an inflation target that depends on fiscal variables.     

FIRM HETEROGENEITY,RULES OF ORIGIN,AND RULES OF CUMULATION*

This article sheds light on the restrictive nature of rules of origin (ROO) and on the role of diagonal cumulation in mitigating the protectionist content of ROO. Empirical evidence suggests that diagonal cumulation has beneficial effects on trade—particularly among spoke countries. We show that these patterns can be reconciled with a theoretical setting where heterogeneous firms buy intermediate inputs from domestic and foreign sources. The model finds that switching from bilateral to diagonal cumulation relaxes the restrictiveness of the ROO and leads the least productive exporters to stop exporting.     

PATENT POOLS AND CROSS‐LICENSING IN THE SHADOW OF PATENT LITIGATION*

This article develops a framework to analyze the incentives to form a patent pool or engage in cross‐licensing arrangements in the presence of uncertainty about the validity and coverage of patents that makes disputes inevitable. It analyzes the private incentives to litigate and compares them with the social incentives. It shows that pooling arrangements can have the effect of sheltering invalid patents from challenges. This result has an antitrust implication that patent pools should not be permitted until after patentees have challenged the validity of each other's patents if litigation costs are not too large.     

OPTIMAL POLICY FOR PRODUCT R&D WITH ENDOGENOUS QUALITY ORDERING: ASYMMETRIC DUOPOLY*

We examine the optimal R&D subsidy/tax policy under a vertically differentiated duopoly. In a significant departure from the existing work, we consider the case of asymmetric costs of product R&D where there is a small technology gap between firms. In our analysis, the endogeneity of quality ordering is explicitly taken into account. We demonstrate the possible anti‐leapfrogging effect of R&D subsidy/tax policy. By committing to a firm‐specific subsidy schedule contingent on firms’ quality choices, the government can not only correct distortions in product quality but also select the socially preferred equilibrium. The latter role is fulfilled by preventing the technologically inferior firm from becoming a quality leader in the industry. Both Bertrand and Cournot cases are analysed.     

SOCIALLY OPTIMAL SUBSIDIES FOR ENTRY: THE CASE OF MEDICARE PAYMENTS TO HMOs*

The U.S. Medicare program has increased its spending on private Medicare plans in anticipation of larger consumer surplus and higher efficiency. To evaluate the welfare consequences of such policy interventions, I develop an empirical model with endogenous entry. Counterfactual simulation reveals the following: subsidizing HMO entry can be justified to enhance national welfare (no excessive entry); the level of price subsidies in 2008, however, is far beyond the optimal level; and the geographic inconsistency between the subsidies and the Medicare fee‐for‐service costs is another source of inefficiency. Resolving this geographic inconsistency significantly raises national welfare by restructuring entry.     

OPTIMAL WEIGHT FOR REALIZED VARIANCE BASED ON INTERMITTENT HIGH‐FREQUENCY DATA*

Japanese stock markets have two types of breaks, overnight and lunch, during which no trading occurs, causing an inevitable increased variance in estimating daily volatility via a naive realized variance (RV). In order to perform a more stabilized estimation, we modify Hansen and Lunde's weighting technique. As an empirical study, we estimate optimal weights by using a particular approach for Japanese stock data listed on the Tokyo Stock Exchange, and then compare the forecast performance of weighted and non‐weighted RV through an autoregressive fractionally integrated moving average model. The empirical result indicates that the appropriate use of the optimally weighted RV can lead to remarkably smaller estimation variance compared with the naive RV, in many series. Therefore a more accurate forecasting of daily volatility data is obtained. Finally, we perform a Monte Carlo simulation to support the empirical result.     

AN OPTIMAL TAX TREATMENT OF LEVIATHAN*

This paper constructs a model in which taxation and public expenditure decisions are made by two decision makers: a “benevolent planner,” who treats all consumers equally in the measurement of welfare; and a “Leviathan planner,” who places more weight on the utilities of “favored consumers.” The benevolent planner can restrict the Leviathan planner's power to tax, but cannot control the allocation of expenditures between desirable public goods and income transfers to favored consumers. Several types of tax restrictions are shown to be welfare-improving from the benevolent planner's viewpoint. These restrictions include a reduction in the size of the tax base, although administrative costs already prevent the Leviathan planner from taxing all commodities.     

OPTIMAL FORECAST COMBINATION UNDER REGIME SWITCHING*

This article proposes a new forecast combination method that lets the combination weights be driven by regime switching in a latent state variable. An empirical application that combines forecasts from survey data and time series models finds that the proposed regime switching combination scheme performs well for a variety of macroeconomic variables. Monte Carlo simulations shed light on the type of data‐generating processes for which the proposed combination method can be expected to perform better than a range of alternative combination schemes. Finally, we show how time variations in the combination weights arise when the target variable and the predictors share a common factor structure driven by a hidden Markov process.     

THE PARETO PRINCIPLE OF OPTIMAL INEQUALITY*

The Pareto principle is often viewed as a mild requirement compatible with a variety of value judgments. In particular, it is generally thought that it can accommodate different degrees of inequality aversion. We show that this is generally not true in time‐consistent intertemporal models where some uncertainty prevails.     

OPTIMAL MIGRATION: A WORLD PERSPECTIVE*

We ask what level of migration would maximize world welfare. Welfare is assumed to be a weighted average of the utilities of the world’s various citizens, but the weights are also country specific. Using a calibrated one‐sector model, we find that unless the weights are heavily biased toward the natives of rich countries, the extent of migration that would be optimal far exceeds the levels observed today. The claim remains true in a two‐sector extension of the model. All versions of the model assume that migration is the only redistributive tool.