Tax Reform,Delocation, and Heterogeneous Firms*

The standard international tax model is extended to allow for heterogeneous firms when agglomeration forces are important, enabling us to study the relocation effects of taxes that vary according to firm size. We show that allowing for heterogeneity permits a given tax scheme to have an endogenously different effect on the location decision of small and big firms, with the biggest firms being endogenously more likely to relocate in reaction to high taxes. We show that a reform that flattens the tax–firm–size profile can raise tax revenue without inducing any relocation.     

Price leadership in a homogeneous product market

The present paper reexamines the price-setting Stackelberg duopoly with asymmetric and strictly convex cost functions in a homogeneous product market. It demonstrates that in a generic environment, the higher-cost firm is likely to be the price leader. That is, leadership by such a firm is either (a) a unique equilibrium or (b) a payoff- and risk-dominant equilibrium in the observable delay game. Thus, while this paper complements and generalizes the findings of recent studies that indicate the possibility of the higher-cost firm’s leadership in homogeneous product markets, it also contrasts with the traditional literature that predicts the dominant-firm price leadership in various environments.     

How to Fight Hard Core Cartels? Comments on Collusion in Industrial Economics

Industrial economics has successfully clarified the mechanism of collusive conduct and its facilitating factors. But policy implications for remedial actions are less straightforward. This paper provides some supplementary comments from the viewpoint of enforcement issues against price-fixing agreements. There are some disagreements among practitioners concerning the probative value of circumstantial (or economic) evidence. Information exchange may be a possible clue to elucidate the evidentiary standard. On the other hand, there seems to be a unanimous agreement, if appropriately designed, on the desirability of leniency programs. Necessity of leniency programs must be a reflection of stricter standard of proof in court decisions, resource constraints of antitrust enforcer, or increasingly defensive acts of conspirators.     

Looking to the future: a new career education programme

A new programme of general family and consumer science for all high school students that can contribute to career education was proposed. The programme had three sessions: ‘single life’, ‘family life’ and ‘retired life’ from the typical three main life stages. Students were challenged to think about their future with regard to real life issues such as housing, location, budgeting time and finances, and family issues. Students were able to consider their future life concretely and specifically from various viewpoints after taking part in this programme. Students also found value in home economics education in developing life skills and knowledge, in considering their actual life and in considering their future life.     

National self-insurance and self-protection against adversity: bureaucratic management of security and moral hazard

This paper extends existing analyses of self-insurance and self-protection—distinctions first made by Ehrlich and Becker (J Polit Econ 80:623–648, 1972)—that countries may implement at a national level in pursuit of their security. We show that, when no market insurance is available, self-insurance alone raises important new issues as to the definition of “fair pricing” and as to the relations between pricing, optimization, risk aversion, and inferiority that are significantly different from standard, conventional market analysis. We also discover a hitherto unrecognized tendency for misallocation between self-protection and self-insurance when both are available and considered together. Because of external effects running from self-protection to self-insurance, governments ruled by myopic bureaucracies and trying to find the right balance face incentives that encourage extreme, self-inflicted moral hazard, to the detriment of self-protection.     

Presence of foreign investors in privatized firms and privatization policy

This paper investigates how the presence of foreign investors in privatized firms affects privatization policy in a mixed oligopoly. We find that an increase in the stockholding ratio of foreign investors in a privatized firm increases the optimal degree of privatization, whereas an increase in the penetration of foreign firms in product markets reduces it. These results imply that the degree of openness of financial markets and that of product markets have contrasting implications for the optimal privatization policy.     

Inefficiency and social exclusion in a coalition formation game: experimental evidence

This paper experimentally investigates the impact of reciprocal behavior in multilateral bargaining and coalition formation. Our results show that reciprocal fairness strongly affects the efficiency and equity of coalition formation. In a large majority of cases, inefficient and unfair coalitions are chosen when their coalition values are relatively high. Up to one third of the experimental population is excluded from bargaining and earns nothing. In monetary terms economically significant efficiency losses occur. We find that the interplay of selfish and reciprocal behavior unavoidably leads to this undesirable consequences. We also compare the predictions of recently developed models of social preferences with our experimental results. We find that some of these models capture the empirical regularities surprisingly well.     

Ricardian Comparative Advantage and Geographical Concentration

This paper analyses geographical concentration using the continuum‐of‐goods trade model in the presence of labor migration, Ricardian comparative advantage and Marshallian‐type external increasing returns to scale. The findings show that higher transportation costs lead to concentration in one region, and lower transportation costs lead to diversification between the regions. For intermediate transportation costs, asymmetric diversification becomes a stable equilibrium in which the smaller population region has higher wage rates and a smaller externality, and vice versa. However, because the asymmetric equilibrium is an inefficient outcome, it leaves room for government intervention.     

Health insurance reform and economic growth: Simulation analysis in Japan

This paper evaluates the drastic reforms of Japanese public health insurance initiated in 2006. We employ a computable general equilibrium framework to numerically examine the reforms for an aging Japan in the dynamic context of overlapping generations. Our simulation produced the following results: first, an increase in the co-payment rate, a prominent feature of the 2006 reform, would promote economic growth and welfare by encouraging private saving. Second, the ex-post moral hazard behavior following the increase in co-payment rates, however, reduces economic growth. Third, Japan's trend of increasing the future public health insurance benefits can mainly be explained by its aging population, and increasing the co-payment rate does little to reduce future payments of public health insurance benefits. Fourth, the effect on future economic burdens of reducing medical costs through efficiencies in public health insurance, emphasis on preventive medical care, or technological progress in the medical field is small. Finally, a policy of maintaining public health insurance at a fixed percentage of GDP will require reducing public health insurance benefits, perhaps up to 45% by 2050. Such a policy also reduces economic growth until approximately 2035. Our simulation indicates that the reform does not significantly reduce future public health insurance benefits, but it can enhance economic growth and welfare by encouraging private saving.     

Endogenous Role in Mixed Markets: A Two-Production-Period Model

In this paper, I investigate endogenous roles in a mixed duopoly, where private and state-owned public turns compete, by allowing two production periods. I find that many equilibria exist, including the Coumot-type equilibrium and one Stackelberg-type equilibrium where the public firm becomes the follower. However, another Stackelberg-type equilibrium where the public firm becomes the leader does not exist. If small inventory costs are introduced, the unique equilibrium outcome becomes the Stackelberg type where the public firm is the follower.