Market design for standardization problems with agent-based social simulation

This paper provides a computational market model with technological competitions among standards and presents simulations of various scenarios concerning standardization problems. The market model has three features: (1) economic entities such as consumers and firms are regarded as autonomous agents; (2) micro interactions among consumer agents or firm agents have essential mechanisms interpretable in real markets; and (3) consumers’ preferences and firms’ technologies co-affect their evolutionary behavior. In recent years, consumers have experienced various inconveniences from de facto competition based on a market mechanism. Standardization communities or committees such as the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC) need to design a compatible standard or a de jure standard in a market. However, it is difficult for market designers to decide a method or timing for the standardization. Here, by introducing a novel technique used in agent-based social simulation (ABSS), which we call “scenario analysis,” we aim to support such decision making. Scenario analysis provides the possible market changes that can occur following implementation of a design policy under a specific market situation and the market mechanisms that generate these market changes.     

An alternative approach to the divergence indicator in the European monetary system

The views expressed in the paper do not reflect those of the International Monetary Fund.     

Globalization of Information Services and the Industrial Structure of the Japanese Economy

Since the late 1990s, ICT has rebuilt organizational networks by connecting value chains and providing communication networks. This made certain types of services tradable, including information services. This change raised the public concern in terms of the effect on employment and innovation capacity in developed economies. The fragmentation of the production network of information services has been led by US firms, but is spreading to East Asia, typically in outsourcing from Japan to China, India and the ASEAN countries. This study empirically assesses the effect of offshore outsourcing on employment in Japan, specifying trading partners. The results show that information services outsourcing affects employment in the manufacturing sector in Japan, but the effect is different depending on trading partners. This study discusses the implications from the viewpoint of industry policy, relating the results to outsourced business processes.     

Foreign Exchange Intervention and Monetary Policy: A Tale of Two Agencies with Conflicting Objectives

In several industrial countries, the government is responsible for foreign exchange intervention while the central bank is given operational independence in conducting domestic monetary policy. We model the interaction between the two agencies when their views differ and generate empirical implications using lattice‐theoretic techniques. Japanese data from 2001–2004 support the model's predictions with respect to central bank behavior. The evidence is less conclusive as to whether the massive intervention of 2001–2004 by the Ministry of Finance caused the Bank of Japan to raise the monetary target.     

Calculations of the shares of financial resources paid by actual payers for transportation improvements

In this paper we identify and quantitatively describe the actual providers of financial resources, termed “actual payers”, for transportation improvements in some advanced countries, using various statistical data. The theoretical framework on which the concept of actual payers is based was presented in our earlier paper (Transport Policy, April 1998). The current study presents the results of calculations performed according to that concept. Because of the complexity and variety of the financial resources drawn on by transportation systems, the means of financial support for transportation have not been made clear when superficial classifications such as “National expenditures”, “Local expenditures”, “Owners/operators' funds” and “Debt” are used. In the present study, the financial support for transportation is calculated on the basis of what is spent by actual payers, such as users, payers of national taxes and payers of local taxes. This approach allows us to show that the shares of actual payers are quite different in each country. In addition, we indicate the characteristics of the shares of the actual payers in each country by calculating the ratio of the users' burden or the dependence of debt, etc.     

Symmetric Cournot oligopoly and economic welfare: a synthesis

Summary Recently, Mankiw-Whinston (1986) and Suzumura-Kiyono (1987) have shown that socially excessive firm entry occurs in unregulated oligopoly. This paper extends this excess entry results by looking into strategic aspects of costreducing R&D investment that creates incentives towards socially excessive investments. In the first stage, firms decide whether or not to enter the market. In the second stage, firms make a commitment to cost-reducing R&D investment. In the third stage, firms compete in output quantities. It is shown that the excess entry holds even in the presence of strategic commitments.This is the synthesized version of the two earlier papers, Okuno-Fujiwara and Suzumura (1988) and Suzumura (1991). We are grateful to Professors J. Brander, D. Cass, M. Majumdar, A. Postlewaite, J. Richmond, A. Sandmo, B. Spencer and J. Vickers for their helpful comments and discussions on earlier drafts. Needless to say, they should not be held responsible for any remaining defects. Financial supports from the Japan Center for Economic Research, Tokyo Center for Economic Research, the Japanese Ministry of Education, and the Institute for Monetary and Economic Research, the Bank of Japan are gratefully acknowledged.     

Presidential Address: Welfare Economics Beyond Welfarist-Consequentialism

Capitalizing on the recent work in social choice theory, I re-examine the foundations of post-Pigovian welfare economics and social choice theory. The structure of the "old" and "new" welfare economics is critically scrutinized, and the culprits of the poverty of welfare economics as well as of Arrovian social choice theory are boiled down to their common informational basis, referred to as welfarist-consequentialism . Alternative avenues that may be taken in an attempt to escape from the poverty of normative economics are identified and examined. These are focused on interpersonal comparisons of welfare levels, opportunity preferences and the procedural fairness of social choice.
JEL Classification Numbers: B21, D63, D71.