Effects of re-invention on industry growth and productivity: evidence from steel refining technology in Japan, 1957–1968

This paper examines the economic impact of re-invention – the degree to which an innovation is modified by user – on industry growth and productivity. The paper focuses on two re-inventions made by a Japanese steel company; these inventions improved the productive efficiency of Austrian-made refining technology, namely basic oxygen furnace (BOF). Results obtained from the plant-level production function estimation indicate that re-inventions account for approximately 30% of the total factor productivity of the BOF, substantially promoting the dissemination of the BOF technology. Our simulation analysis indeed reveals that re-inventions contributed to steel output growth by about 14%. This paper also documents that innovating companies played the role of a ‘lead user’ in developing and disseminating their re-invented technologies.     

The optimal choice of internal decision‐making structures in a network industry: A multiproduct monopoly case

Focusing on the role of network compatibility effects between products of a multiproduct monopoly and on the form of consumer expectation for network sizes, we consider the optimal choice of internal decision‐making structures, that is, centralization and decentralization, and its welfare effect in a network industry. We demonstrate that if the degree of network compatibility effects is sufficiently large, the decentralized decision making is socially optimal. However, in the case of consumer ex post expectations, it is optimal for the firm's owners to choose the centralized decision making. We apply the model to the cases of price‐setting games, complementary products, and negative network externalities to examine the optimal choice of internal decision‐making structures.     

The Role of GATT/WTO as a Commitment Device in the Presence of a Time Lag: Free Trade,Time‐consistent Tariff Policy and Market Size

We consider whether a free trade policy is superior to tariff policies in the presence of a time lag between production and trade decisions. We show that the preferable choice between a free trade policy and a time‐consistent tariff policy depends on the market size of the importing country. However, because a free trade policy itself is not necessarily credible in the presence of a time lag, the importing country requires an international organisation such as GATT/WTO as a commitment device. Accordingly, employing a non‐cooperative game approach, we analyse under what conditions becoming a member of such an international organisation is a subgame perfect Nash equilibrium and show that free trade under the GATT/WTO regime is Pareto improving for the importing and exporting countries.     

On the paradoxical case of a consumer-based environmental subsidy policy

We apply an environmentally differentiated duopoly model to the analysis of environmental policy involving consumer subsidies based on the emission levels of the products consumers purchase. More specifically, we consider the environmental and welfare effects of subsidizing consumers who purchase environmentally friendly goods in the case of a partially covered market with a Cournot duopoly. We show that, paradoxically, the subsidy policy degrades the environment, and that the optimal policy depends on the degree of marginal social valuation of environmental damage. That is, if the marginal social valuation of environmental damage is larger than a certain value, a consumer-based environmental subsidy policy is not socially optimal.     

QUOTAS,QUALITY CHOICE,AND COST FUNCTION: A Foreign Monopoly Case

It is well known in international economics that quotas lead to quality upgrading of imports. In this article, however, we reconsider this proposition by focusing on the nature of cost function. If a fixed cost is an increasing function of quality, quotas can lead to quality downgrading of imports. This issue will be addressed in the context of a foreign monopoly.     

Effect of a tariff on the environment and welfare: The case of an environmental differentiated duopoly in a Green Market

Employing a model of environmental quality-differentiated products, we analyze the effect of an ad valorem tariff on the unit emission level of the products, the environment and welfare in the Bertrand and the Cournot duopoly cases, respectively. We show that the effect of the tariff policy depends on the mode of market competition and the degree of marginal social valuation of environmental damage.     

The Choice of Optimal Protection under Oligopoly: Import Tariff v. Production Subsidy

Economists researching the area of optimal protection have tended to analyse the ranking of alternative policy tools in the presence of perfect competition, either when the government in an importing country achieves a non-economic target, or when there is a market distortion. Assuming international oligopolistic competition, I reconsider the choice of optimal policy instruments, i.e. an import tariff and a production subsidy. I show that the choice of optimal policy instruments depends on the relative number of home firms and foreign ones and on the magnitude of international cost differences.
JEL Classification Numbers: F12, F13.     

Cell Production and Workplace Innovation in Japan: Toward a New Model for Japanese Manufacturing?

This article investigates the current trend toward cell production and other workplace innovations in Japan using a large–scale sampling survey of manufacturing firms and in–depth interviews with four leading electrical and electronic establishments. The quantitative analysis reveals the correlation between the use of cell production and the ratio of female to male workers and production strategy variables, as well as the positive effect of cell production on operating profit rates and ordinary profit rates. The case studies reveal the following points: First, processes and organizations have been decentralized to the degree that individual workshops move toward taking primary responsibility for customer relations, production decisions, and delivery. Corporate headquarters increasingly play a coordinating rather than decision–making role. Second, firms have steadily implemented make–to–order systems by tightening links to suppliers and customers and developing new inventory and cost–control systems. Third, firms have started to implement more performance–based personnel practices. However, considerable variance among firms is observed in complementary changes, particularly personnel innovations.