Public investment criteria under optimal nonlinear income taxation without commitment

In this study, we highlight that the incredibility of the government's commitment to a certain tax policy is a determinant of production inefficiency. We show that if the government cannot commit to a certain tax policy and if the types of taxpayers are completely separated, then the production efficiency theorem could be violated in an optimal solution. In this case, an incremental unit of public or private capital affects taxpayers' labor supply through wage rates. In a situation where public capital is more (less) complementary to labor than private capital, public investment tightens (relaxes) the incentive compatibility constraint more than private investment.     

Subsidy competition and imperfect labor markets

This study presents a two‐country model of subsidy competition for manufacturing firms under labor market imperfections. Because subsidies affect the distribution of firms, subsidies influence unemployment rates and welfare in both countries. We show that when labor market frictions are high, subsidy competition is beneficial, although subsidies under subsidy competition are inefficiently high. In the coordinated equilibrium, the supranational authority provides a subsidy to firms that equal the expected total search costs, which increases the number of firms relative to laissez‐faire and improves welfare relative to laissez‐faire and subsidy competition. Finally, we find that a rise in a country's labor market frictions raises the equilibrium subsidy rate, affects unemployment rates, and lowers welfare.     

Platform Sharing in a Differentiated Duopoly

Platform sharing across manufacturers has become common practice in the automobile industry. Although platform sharing reduces the degree of product differentiation, manufacturers can reduce their procurement costs by taking advantage of the commonality of components. We investigate this trade-off through analyzing a model that incorporates manufacturer–supplier relationships into a differentiated duopoly model, and find an interesting inverse relationship between the advantage of platform sharing and manufacturers' costs to communicate with their potential suppliers. We also explore welfare consequences of the Internet trading exchanges by considering an extension that allows the manufacturers to jointly establish a business-to-business electronic marketplace.     

Effects of Anticipated Fiscal Policy Shock on Macroeconomic Dynamics in Japan

This study investigates the effects of fiscal policy on macroeconomic dynamics in Japan with a particular focus on the effects of anticipated fiscal policy shock and the recent policies of Abenomics. We identify anticipated fiscal policy shock by combining excess stock returns for the construction industry and the vector autoregressive model with robust sign restrictions derived from a theoretical model. The primary result is that GDP and consumption respond positively to anticipated fiscal policy shock. In addition, the result of the historical decomposition that focuses on the period of Abenomics reveals that anticipated fiscal policy shock positively contributes to consumption dynamics.     

Aid effectiveness,governance and public investment

In this paper, we develop a growth model in which aid finances infrastructure investment and pro-poor spending in order to analyze ways through which aid can be made more effective. We assume that the recipient countries are aid-dependent in the early phase of development and that they ultimately become independent. In the model, donors can accelerate a recipient's independence from aid by investing in infrastructure. We demonstrate that even a small increase in aid can improve aid effectiveness and that aid effectiveness depends more on the growth rate than on the efficiency of the government.     

Durable Goods, Monopoly Maintenance, and Time Inconsistency

Durable-goods producers frequently choose to monopolize the maintenance markets for their own products. This paper shows that, similar to leasing, one reason a firm may employ this practice is that it reduces or even eliminates problems due to time inconsistency. We first demonstrate this result in a setting closely related to Bulow's (1982) classic analysis of durable-goods monopoly. We then show the result in a setting similar to those considered in Waldman (1996, 1997) and Hendel and Lizzeri (1999) , in which new and used units are imperfect substitutes. The paper also discusses alternative explanations for the phenomenon.     

Strategic management cycle: The underlying process building aligned linkage among operations practices

This study explores the mechanism of building an effective linkage among manufacturing practices that is a basic attribute of high performance manufacturing. High performance manufacturing companies are those that sustain high levels of performance over time. We propose a strategic management cycle, which explains how a firm establishes and maintains sustainable performance. We hypothesize and demonstrate how the cycle creates an effective linkage that integrates strategic activities and operational practices, which in turn yields high performance. We also argue and show how the first stage of the cycle, visionary planning, supported by the cross-functional culture, is a key to the high performance manufacturing company.     

Partial Ownership Induces Customised Investments Under Repeated Interaction: An Explanation of Japanese Manufacturer‐Suppliers Relationships

A dominant manufacturing firm often holds partial shares of its suppliers, and the suppliers are willing to make investments customised to the manufacturer. Furthermore, this type of manufacturer‐suppliers relationship is often long‐term and stable. This paper provides an explanation for this phenomenon by modelling repeated interaction between a downstream manufacturer and upstream suppliers. In the model, the manufacturer could avoid, by partially owning a supplier, hold‐up problems which would arise from the supplier's customised investment. The model distinguishes between two sources of appropriable quasi‐rents, and yields new empirical predictions concerning the relationship between appropriable quasi‐rents and vertical integration.     

Knowledge transfer and partial equity ownership

An alliance often involves one firm acquiring an equity stake in its alliance partner. We explore oligopoly models that capture the link between knowledge transfer and partial equity ownership (PEO), where alliance partners can choose the level of PEO. PEO can increase the alliance partners' profitability by inducing knowledge transfer, but the PEO itself reduces their joint profit because it induces other firms to take more aggressive actions. This trade‐off endogenously determines the level of PEO, which can benefit consumers and/or improve welfare. Given the growing antitrust interest in PEO, we explore the antitrust implications of our analysis.     

Does aid affect inequality?

We show that there was a negative correlation between pro-poor aid and inequality in the period before the mid-2000s. This article provides an explanation for this observed relationship. Using panel data on 34 countries for the period 1996–2014, we test the hypothesis that pro-poor aid has an inequality-reducing effect. To demonstrate that the negative correlation is not spurious, we use dynamic panel techniques with alternative specifications. We show that the share of pro-poor aid has a negative effect on inequality. In addition, we show that the interaction term between the poverty rate and the change in pro-poor aid has a significant effect. These empirical results are consistent with our theoretical predictions. The results imply that aid can reduce inequality by altering the allocation of aid, rather than by increasing the amount of aid.