Nest-monotonic two-stage acts and exponential probability capacities

This paper examines conditions for Choquet expected utility (CEU) to satisfy both the reduction of two-stage acts and the recursion axioms, which are taken for granted in economics. A key idea of this paper is to consider nest-monotonic two-stage acts, which share their rankings of states with those of their reduced one-stage acts. Our main theorem shows that the axioms, one of which is restricted to nest-monotonic two-stage acts, and consequentialism are satisfied if and only if the preference is exponential CEU, which is such that the probability capacity is an exponential transformation of a probability measure. This result indicates that within a specified range of decision problems, exponential CEU is the only form of CEU that derives indifference to the timing of information resolution. Furthermore, the relation between first- and second-stage exponential CEU is characterized both by the f*-Bayesian updating rule and by comonotonic dynamic consistency. Conditions to establish the law of iterated expectation for CEU are also discussed.     

Strategic Interaction Among Local Governments in Japan: An Application to Cultural Expenditure

In the context of limited local government resources, cultural expenditures are often targeted for reduction. In Japan in particular, with its aging population, cultural expenditures have low priority. This paper examines whether or not local governments strategically influence each other with respect to cultural spending, using data from Japanese local governments. By estimating the reaction functions for local cultural expenditures, we find that there exists free‐rider behaviour between local cultural expenditures that produce beneficial spillover effects. We also find a larger free‐rider incentive the shorter the distance between neighbouring regions, the shorter the travel time between neighbouring regions, and the larger the neighbouring region's population. Furthermore, our results reveal that the provision of cultural services through intergovernmental strategic behaviours is more elastic with respect to the relative change of the distance or the travel time among neighbouring regions than to that of the population size among neighbouring regions.     

洛阳“一五”时期苏式住宅街坊考察与改造探索

以洛阳"一五"时期建造的苏式住宅为研究对象,阐述了其建造的历史,分析了整体的建筑风格特色,并对其现状进行调查研究,探讨了典型街坊改造更新的措施和方法,力求平衡历史街区的保护与社会经济发展,使历史遗产得以永续保存。     

A simple dynamic decentralized leadership model with private savings and local borrowing regulation

This paper considers a simple dynamic decentralized leadership model with local borrowing and regional productivity-enhancing investment. In this model, the central government is benevolent but cannot commit to ex post intergovernmental transfer policies, while local governments act strategically after accounting for the ex post motives of the central government. We then investigate inefficiency in the subgame perfect equilibrium. We analyze the effect of central control on local borrowing and show that central control is of no benefit because ex ante local taxation works to offset it. We find the model yields different policy implications that central control is effective when extended to the case of residential mobility.     

新兴市场区位特定优势所带来的超额利润问题探析——服务业和分销业案例

地域优势带来的额外利润问题不仅限于制造业。近年来,跨国公司陆续将服务型和销售型子公司转移至相对低成本的新兴市场,产生了与制造业转移同样的转让定价反避税挑战。在不同的转让定价方法下,处理该类型公司的地域优势问题遇到的挑战有所不同。面对这些挑战,纳税人和税务当局都必须通过客观而严密的经济学分析进行探讨,方能得出一个各方满意的解决方案。     

Dominance of a Class of Stein type Estimators for Optimal Portfolio Weights When the Covariance Matrix is Unknown

For the estimation problem of mean-variance optimal portfolio weights, several previous studies have proposed applying Stein type estimators. However, few studies have addressed this problem analytically. Since the form of the loss function used in this problem is not of the quadratic type commonly used in statistical studies, there have been some difficulties in showing analytically the general dominance results. However, dominance results are given here of a class of Stein type estimators for the mean-variance optimal portfolio weights when the covariance matrix is unknown and is estimated. The class of estimators is broader than the one given in a previous study. The results we have obtained enable us to clarify conditions for some previously proposed estimators in finance to have smaller risks than the estimator which we obtain by plugging in the sample estimates.     

Factor market distortions,factor intensities and economic welfare: Theory and computation

This paper shows that (1) in the Heckscher-Ohlin type of the two-factor, two-commodity model, a transformation curve is actually very close to a negatively sloped-straight line whether factor market distortions exist or not, (2) factor market distortions will decrease the economic welfare not because of a shrinkage of the transformation curve, but because of a divergence of private from social opportunity costs in production, and (3) contrary to the Heckscher-Ohlin theory of trade pattern, each country will actually tend to specialize completely after trade if factor intensity differentials are not extremely large between the two industries.     

Too big or too small? A synthetic view of the commitment problem of interregional transfers

There is a growing body of literature on the commitment problem of interregional transfers. The problem occurs because of an ex post bailout by a central government leading to ex ante adverse incentive consequences for a local government. However, different models have yielded different economic consequences. The local government may be too large, overspending and/or overborrowing, or it may be too small, raising less of its own revenue. In the presence of interregional spillovers, the equilibrium may yield a Pareto-efficient outcome. The present paper aims to synthesize these models, developing a simple decentralized leadership model. A critical question concerns what decision is made ex ante by the local government—namely public expenditure or tax collection—with the remaining policy instrument being residual adjusted by ex post transfers. We discuss how different scenarios affect the equilibrium outcome.     

Interregional redistribution as a cure to the soft budget syndrome in federations

The soft budget syndrome is ubiquitous in federations. It emerges whenever a high tier in a fiscal system provides extra resources to a lower tier to prevent the latter from failing to reach a mutually agreeable predetermined target. Interregional income redistribution is also an endemic feature of most federations. We show that the center’s ability of making interregional transfers ex-ante and ex-post cures the soft budget syndrome whenever the center is perfectly informed ex post. Under these circumstances, the interregional transfer scheme makes it a dominant strategy for each regional government to truthfully reveal its privately held information ex-ante.