New functionality development through follower substitution for a leader in open innovation

There has been a paradigm shift to a knowledge-oriented economy in the 21st century. Consequently, there has also been a shift in where innovation typically occurs. This shift has been from the production site toward the process of product diffusion. That is, innovation occurs more frequently at the point at which a product or service is moved into the marketplace where it is immediately modified through customer interaction. In this process, new “functionality” — services, the delivery method or even product changes occur in the diffusion process. Given the need to constantly create new value through new product “functionality” or new “functionality development”, firm strategy must address the issue of how to enhance innovation at this new locus — the diffusion process. Sustainable new functionality development over time has become crucial to a firm's competitiveness. In this context, firms have to develop new functionality as early and quickly as possible; leveraging whatever innovation exists in the marketplace. According to theory, the early emergence of functionality development in this context depends on a dynamic system in which the imitator (follower) is constantly substituting for the innovator (leader). This substitution corresponds to the dynamics observed in the process referred to as “open innovation”. According to this theory, functionality development through follower substitution for a leader would be critical for a firm's competitiveness in the open innovation environment. Furthermore, open innovation could be a process for sustaining the ongoing creation of new value through functionality development maximizing limited resources. This paper attempts to demonstrate this hypothesis through an empirical analysis of this process of substitution in major innovative goods and services in Japan.     

Inside the learning dynamism inducing the resonance between innovation and high-demand consumption: A case of Japan's high-functional mobile phones

Confronting the simultaneous global economic stagnation that has resulted in diminishing consumption, a new driver which can instill in customers an exciting story with their own initiative and thrills them with gratification of consumption is essential. Japan's mobile phone driven innovation may provide a constructive suggestion to this requirement.On the basis of an empirical analysis focusing on the learning dynamism for innovative products in Japan's digital industry, this paper demonstrates the foregoing hypothetical anticipation. Based on measurement of dynamic learning coefficients for seven leading innovative products centered on mobile phones, the Granger causal test, Chow forecast test and wavelet analysis were conducted, and the significant role of mobile phones in leveraging broad dissemination, learning and absorption of core technologies essential to the advancement of digital industry was identified. Furthermore, significant role of demanding customers in inducing resonance between mobile phones learning and that of innovative products was demonstrated.     

Collusive behavior under a leniency program

We investigate how a leniency program, which is a policy that gives reduced penalties to colluding firms that cooperate with investigations of the Antitrust Authority, affects firms’ collusive behavior. Using a model of quantity competition, we show that an amnesty to the second or later candidates of a leniency program is of no use if colluding firms can choose the most profitable collusion. Because a leniency program is a general rule that is applied to various markets in a country, our result implies that the design of a leniency program depends on which kinds of market structure are prevalent in the country.     

Pollution abatement efforts: a regional analysis of the Chinese industrial sector

Although China has had rapid economic growth, it has borne a more significant economic burden or loss because of environmental pollution. However, the country has addressed this problem with various pollution abatement efforts. Some prior studies analysed the relationship between such efforts and pollution emissions, but did not show how these efforts affect pollution reduction. This study investigates the effects of pollution abatement efforts on industrial SO_X, NO_X and CO₂ emissions in the context of pollution reduction in China by panel data for 29 provinces from 1995 to 2010. The empirical results are as follows. First, emissions have increased rapidly in the 2000s. Second, rapid income growth has led to a greater increase in emissions. Third, pollution abatement would assist improvements in environmental quality. Further, this study reveals that abatement efforts affect emissions through the adoption of pollution removal measures.     

Alternative Land-Price Indexes for Commercial Properties in Tokyo

The System of National Accounts (SNA) requires separate estimates for the land and structure components of a commercial property. Using transactions data for the sales of office buildings in Tokyo, a hedonic regression model (the “builder’s model”) was estimated and this model generated an overall property price index as well as subindexes for the land and structure components of the office buildings. The builder’s model was also estimated using appraisal data on office building real estate investment trusts (REITs) for Tokyo. These hedonic regression models also generated estimates for net depreciation rates, which can be compared. Finally, the Japanese government constructs annual official land prices for commercial properties based on appraised values. The paper compares these official land prices with the land prices generated by the hedonic regression models based on transactions data and on REIT data. The results reveal that commercial property indexes based on appraisal and assessment prices lag behind the indexes based on transaction prices.     

A cost-effectiveness analysis of denosumab for the prevention of skeletal-related events in patients with multiple myeloma in the United States of America

Objective: A large, pivotal, phase 3 trial in patients with newly diagnosed multiple myeloma (MM) demonstrated that denosumab, compared with zoledronic acid, was non-inferior for the prevention of skeletal-related events (SREs), extended the observed median progression-free survival (PFS) by 10.7 months, and showed significantly less renal toxicity. The cost-effectiveness of denosumab vs zoledronic acid in MM in the US was assessed from societal and payer perspectives.

Methods: The XGEVA Global Economic Model was developed by integrating data from the phase 3 trial comparing the efficacy of denosumab with zoledronic acid for the prevention of SREs in MM. SRE rates were adjusted to reflect the real-world incidence. The model included utility decrements for SREs, administration, serious adverse events (SAEs), and disease progression. Drug, administration, SRE management, SAEs, and anti-MM treatment costs were based on data from published studies. For the societal perspective, the model additionally included SRE-related direct non-medical costs and indirect costs. The net monetary benefit (NMB) was calculated using a willingness-to-pay threshold of US$150,000. One-way deterministic and probabilistic sensitivity analyses were conducted.

Results: From a societal perspective, compared with zoledronic acid, the use of denosumab resulted in an incremental cost of US$26,329 and an incremental quality-adjusted life-year (QALY) of 0.2439, translating into a cost per QALY gained of US$107,939 and a NMB of US$10,259 in favor of denosumab. Results were sensitive to SRE rates and PFS parameters.

Limitations: Costs were estimated from multiple sources, which varied by tumor type, patient population, country, and other parameters. PFS and overall survival were extrapolated beyond the follow-up of the primary analysis using fitted parametric curves.

Conclusion: Denosumab’s efficacy in delaying or preventing SREs, potential to improve PFS, and lack of renal toxicity make it a cost-effective option for the prevention of SREs in MM compared with zoledronic acid.     

Sequential mergers and competition policy under partial privatisation

We examine optimal merger and privatisation policies in a partially privatised oligopoly with differentiated goods. We first show that under the subgame perfect Nash equilibrium, sequential mergers either emerge completely or do not emerge at all. Given this outcome, we derive the following policy implications. First, the level of social welfare can be U‐shaped with respect to the number of merged firm pairs. That is, given that there are some mergers that have already taken place, further mergers may actually lead to welfare improvement. However, these welfare‐improving mergers may not be privately profitable, implying that merger‐friendly policies are appropriate. Second, policymakers can halt privatisation in order to diminish the private incentive for further sequential (welfare‐deteriorating) mergers and improve welfare. Third, full nationalisation is never optimal unless the goods are homogeneous or independent. Our results are applicable to the Japanese life insurance industry and the partial privatisation of Japan Post Insurance.     

An analysis of stability of the north–south growth model of trade: Saddle-path stability of the generalized grossman–helpman model with skilled and unskilled labours

Abstract

Following the Common Agency approach to political equilibrium, we examine how domestic interest groups can influence national policies toward FDI and how the choice of instrument by the government can affect lobbying activities. Domestic firms lobby for lower subsidies when a discriminatory subsidy on FDI is applied. However, when a subsidy is applied uniformly to both groups, they may lobby for higher subsidies. The nature of lobbying is also different for proportional and lump-sum profit subsidies when uniformly applied. The qualitative effect of the number of domestic firms or the degree of corruption on the equilibrium depends on the choice of instruments. Finally, with the help of numerical simulation, we examine whether there is any potential conflict between the government and the lobby groups on the choice of the instrument.     

Impact of lowering the legal blood alcohol concentration limit to 0.03 on male, female and teenage drivers involved alcohol-related crashes in Japan

In June of 2002, a revision to part of the Road Traffic Act drastically increased the penalties for drinking and driving offences in Japan. Most notably, the legal blood alcohol concentration (BAC) limit for driving was lowered from 0.05 mg/ml to 0.03 mg/ml. The rationale for the new lower BAC limit was predicated on the assumption that drinking drivers will comply with the new, lower limit by reducing the amount of alcohol they consume prior to driving, thereby lowering their risk of crash involvement. This, in turn, would lead to fewer alcohol-related crashes. A key limitation of previous lower BAC evaluation research in determining the effectiveness of lower legal BAC limit policies is the assumption of population homogeneity in responding to the laws. The present analysis is unique in this perspective and focuses on the evaluation of the impact of BAC limit reduction on different segments of the population. The chief objective of this research is to quantify the extent to which lowering the legal limit of BAC has reduced male, female and teenager involvement in motor vehicle crashes in Japan since 2002. Most notably, the introduction of reduced BAC limit legislation resulted in a statistically significant decrease in the number of alcohol-impaired drivers on the road in Japan, indicating responsiveness to the legal change among adults and teenagers. In addition, this preliminary assessment appears to indicate that the implementation of 0.03 BAC laws and other associated activities are associated with statistically significant reductions in alcohol-involved motor vehicle crashes. In comparison, the rates of total crashes showed no statistically significant decline nor increase in the period following the introduction of the BAC law, indicating that the lower BAC limit only had an effect on alcohol-related crashes in Japan. The evidence suggests that the lower BAC legal limit and perceived risk of detection are the two most important factors resulting in a sustained change in drinking and driving behaviour in Japan. It is recommended that future research and resources in other countries be focused on these factors as determinants to reduced alcohol-related crashes.