Trade Liberalization and Labor Unions

The present note builds a two-country model of Cournot oligopoly with country-specific labor unions. The impact of trade liberalization on wages and its consequent impact on union behavior and trade patterns are examined. We show that the union with relatively fewer number of firms will face the stronger pressure for wage moderation when trade is liberalized. We use this result to construct a simple example in which a country with higher autarky price becomes a net exporter of that good. We also discuss that our results are critically dependent on the mode of competition between firms.     

Agglomeration Economies and a Test for Optimal City Sizes in Japan

We estimate aggregate production functions for metrpolitan areas in Japan to derive the magnitudes of agglomeration economies. Using the estimates of agglomeration economies, we test if Japanese cities, in particular, Tokyo, are too large.J. Japan. Int. Econ.,December 1996,10(4), pp. 379–398. Faculty of Economics, University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo 113, Japan; Socio-Economic Research Center, Central Research Institute of Electric Power Industry, 1-6-1 Ohtemachi, Chiyoda-ku, Tokyo 100, Japan; and Institute of Socio-Economic Planning, University of Tsukuba, 1-1-1 Tennodai, Tsukuba, Ibaraki 305, Japan.     

Strategic Export Policy in a Differentiated Duopoly: A Note

The purpose of this paper is to further explore how optimal export policies are affected by the nature of oligopolistic competition and the structure of demand. It is shown that (1) the more cost-competitive the home firm is, the higher the optimal level of export intervention becomes; (2) as the goods become better complements, the optimal level of export intervention increases; (3) the nature of the effects of strategic export policies on foreign firms depends on both the mode of competition and the structure of demand.     

A Note on the Distribution of Trade Gains in a Model of Monopolistic Competition

This article examines the relationship between relative country size and the welfare consequences of opening trade in a model of monopolistic competition with trade costs. The findings indicate that if two countries produce differentiated products in trading equilibrium, the rate of welfare changes brought about by opening trade will be equalized across the countries.     

Interconnected communications networks and home market effects

Abstract.  This study develops a model of trade that highlights the effects of the interconnection of country‐specific communications networks as a driving force behind trade in high‐tech products with positive transport costs. By constructing a two‐country model of monopolistic competition with two production factors, it is shown that the locational decisions of firms may magnify the influence of interconnected networks. In a reversal of the standard home market effects, the abundance of unskilled labour in the developing countries can attract high‐tech firms from the developed countries. JEL classification: D43, F12, L13     

On Chamberlinian-Ricardian Trade Patterns

This study provides a simple, many‐industry model of trade which emphasizes the interaction between cross‐country technical heterogeneity (i.e., a Ricardian aspect) and monopolistic competition among producers of differentiated products (i.e., a Chamberlinian aspect) as determinants of trade patterns. It is shown that the emergence of intra‐industry trade is crucially dependent on the shape of the technology index schedule, which is obtained as a step‐function.     

A constrained least square approach to the estimation of the term structure of interest rates

This paper proposes a new practical method for estimating forward rate curves using bond prices available in the market. It is intended to improve the least square estimation method proposed by Carleton and Cooper by imposing additional constraints to guarantee the smoothness of the forward rate curves. The resulting problem is a nonconvex minimization problem, for which we will propose an efficient algorithm for calculating an approximate optimal solution. Computational experiments show that this method can efficiently generate smooth forward rate curves without increasing the residual errors in terms of least square fitting. Also, we will compare this result with an alternative and more efficient constrained least absolute deviation method.     

On the Emergence of Intra-industry Trade

This note explores the determinants of intra-industry trade by extending the standard Chamberlinian-Ricardian monopolistic competition trade model (e.g., Krugman, 1979) to have a continuum of industries (e.g., Dornbusch et al., 1977). It shows that the degree of cross-country technical differences among industries plays an important role as a determinant of trade within each industry.     

Agency Theory and Japanese Corporate Governance

Agency theory has been used to predict managerial strategic behavior in the past. However, critics have commented that this theory, in its applications, has been too Anglo-American specific. Research in non-Anglo-American settings has been scarce. Recent changes in the Japan Commercial Code and moves by Japanese corporations to access global equity markets allow us to test the veracity of this criticism by examining how Japanese firms respond strategically to the increased requirement for disclosure and transparency; whether they behave in ways congruent with agency theory predictions. Agency theory states that managers who are held accountable for their use of corporate resources will deploy them in ways to enhance stockholder value rather than increase their shares of the economic residual. Thus, we would expect to observe a difference in Japanese managerial behavior accompanying an increased exposure to global capital markets. Using data from Japanese firms, we found some support for the usefulness of agency theory to non-Anglo-American settings when the rules of capital market discipline are allowed to operate.