Does yardstick regulation really work? Empirical evidence from Japan’s rail industry

This paper investigates the effectiveness of yardstick regulation by using a data set of rail companies in Japan and estimating the variable frontier cost function. In the variable cost function, both the coefficient of the yardstick regulation dummy and the coefficient of the competitive pressure outside the industry show the negative sign with statistical significance, indicating that the introduction of yardstick regulation and competition tend to decrease a rail company’s variable cost. Between 1995 and 2000, railways to which yardstick regulation was applied improved cost efficiency by about 11.5%.     

Tiebout's tale in spatial economies: Entrepreneurship, self-selection, and efficiency

This paper establishes the existence and efficiency of equilibrium in a local public goods economy with spatial structures by formalizing Hamilton's [Hamilton, B.W., 1975. Zoning and property taxation in a system of local governments Urban Studies 12, 205–211] elaboration of Tiebout's [Tiebout, C., 1956. A pure theory of local public expenditures. Journal of Political Economy 64, 416–424] tale. We use a well-known equilibrium concept from Rothschild and Stiglitz [Rothschild, M., Stiglitz, J.E., 1976. Equilibrium in competitive insurance markets: an essay on the economics of imperfect information. Quarterly Journal of Economics 40, 629–649] in a market with asymmetric information, and show that Hamilton's zoning policy plays an essential role in proving the existence and efficiency of equilibrium. We use an idealized large economy following Ellickson, Grodal, Scotchmer and Zame [Ellickson, B., Grodal, B., Scotchmer, S., Zame, W.R., 1999. Clubs and the market, Econometrica 67, 1185–1217] and Allouch, Conley and Wooders [Allouch, N., Conley, J.P., Wooders, M.H., The Tiebout Hypothesis: On the Existence of Pareto Efficient Competitive Equilibria, (2004), mimeograph]. Our theorem is directly applicable to the existence and efficiency of a discrete spatial approximation of mono- or multi-centric city equilibria in an urban economy with commuting time costs, even if we allow the existence of multiple qualities of (collective) residences, when externalities due to traffic congestion are not present.     

Pure Strategy Nash Equilibrium in a Group Formation Game with Positive Externalities

This paper identifies a domain of payoff functions inno spillovernoncooperative games withPositive externalitywhich admit a pure strategy Nash equilibrium. Since in general a Nash equilibrium may fail to exist, in order to guarantee the existence of an equilibrium, we impose two additional assumptions,AnonymityandOrder preservation. The proof of our main result is carried out by constructing, for a given gameG, a potential function Ψ over the set of strategy profiles in such a way that the maximum of Ψ yields a Nash equilibrium in pure strategies ofG.Journal of Economics LiteratureClassification Numbers: C72, D62, H73.     

The Perceptual Gaps Between Companies’ and University Students’ Views on Fundamental Competencies

This study examines the gap between the competencies that companies expect of university students and those that university students believe companies are seeking. We find that a gap exists between companies’ and students’ evaluations of the competencies required in the workplace. Surprisingly, companies’ and students’ priorities related to competencies are different. Our results show that both companies and students highly value versatile personal competencies as essential skills for employees. Teamwork skills are not a top priority for companies although students value them highest of the various attributes. Gaps also exist between the two groups regarding their evaluation of personality traits. These findings contribute to the development of appropriate curricula for universities and career education.