Individual Characteristics,Behavioral Biases,and Trade Policy Preferences: Evidence from a Survey in Japan

Import liberalization is one of the most actively debated issues in trade policy. This paper examines how trade policy preferences are related to individual characteristics based on a survey in Japan. Among 10,000 surveyed individuals, people working in non‐agricultural sectors, those working in managerial occupations, or those above retirement age tend to favor freer imports. This paper also finds that people who are influenced by the status quo bias are likely to oppose import liberalization even after controlling for each individual's various characteristics, suggesting that neither income compensation nor insurance schemes are sufficient for expanding support for free trade.     

Free Trade Agreement and Vertical Trade with a Manufacturing Base

We examine the effects of free trade agreement (FTA) on tariffs and welfare in a three‐country model with vertical trade, where an FTA is formed between a country exporting a final good whose production involves using an intermediate good, and a country exporting the intermediate good in exchange for the final good. We demonstrate that the FTA reduces its member country's external tariff, whereas it raises the non‐member country's tariff. The non‐member country unambiguously becomes better off. In contrast, the FTA may or may not make its member countries better off. This implies that the formation of an FTA may not always be Pareto‐improving.     

Strategic complementarities and nested potential games

This paper reports that every finite game of strategic complementarities is a nested pseudo-potential game defined by Uno [Uno, H., 2007. Nested potential games. Economics Bulletin 3(17), 1–8] if the action set of each player is one-dimensional, except possibly for one player.     

Coverage area expansion, customer switching, and household profiles in the Japanese broadband access market

This paper examines the diffusion process of Internet broadband access in Japan by modeling the household choice of access modes. Estimates reveal that the characteristics of users, rather than those of the access modes, play a significant role in demand substitution across the modes. Simulation exercises indicate that had optic fibers (fiber-to-the-home; FTTH) been made available to the whole country in 2005, only 10% of households would have switched to that mode. This result implies that once chosen, the household choice of access mode persists, and that indirect network effects are an important element in decisions to adopt the new technology of broadband. Finally, policy implications are discussed.     

Japanese Rice Market Liberalization: A Competitive Equilibrium Approach

This paper quantifies the effect of Japanese rice imports on the Japanese rice market with special attention to the farmland market in the year 2000, based on information available in 1997. Tariff and quota policies do not affect the equilibrium price of rice and rent significantly, given the current acreage controls. The removal of the acreage control programme would reduce the autarky price of rice by 30%. With free importation of rice into Japan, the price of rice would be halved, and the potential increase in the consumer surplus could be 0.3% of the 1995 Japanese GDP.
JEL Classification Numbers: F14, Q17, Q18.     

Market Size and Firm Location in a Service Industry

This paper investigates the welfare effects of firm location in a service industry. We consider the situation where firms determine their locations in either of two regions with a difference in market size. From the viewpoint of the consumers' welfare, there are too few firms in the large market and too many in the small market. However, from the viewpoint of the producers' and social welfare, the opposite is true. Further, an increase in the difference in market size is unambiguously unfavorable for the producers. On the other hand, such an increase is favorable for the consumers and the economy as a whole.     

CB – Time Dependent Markov Model for Pricing Convertible Bonds

In this paper, we propose what we call the convertible bond (CB) – timedependent Markov model, which prices N given individual convertible bondssimultaneously, and apply it to Japanese convertible bond data. One of themain features of the model is that it makes full use of the correlationstructure of convertible bond prices. The empirical results show that themodel well describes individual prices in the market.     

Estimates of average marginal tax rates on factor incomes in Japan

In this paper, we estimate average marginal tax rates on factor incomes in Japan from 1963 to 2007. We adapt the method of D.H. Joines [Estimates of effective marginal tax rates on factor incomes. J. Bus. 54 (2), 191-226.] to the Japanese tax and social security system. Average marginal tax rates on labor incomes without social security premiums range from 14% to 21%, whereas the rates on incomes with social security have increased from 21% to 33%. Tax rates on capital incomes have fluctuated between 35% and 58%. We also compare our estimates with average tax rates and the wedges from business cycle accounting.