International duopoly with overseas production and strategic trade policies

This paper examines the strategic export policies in a reciprocal market model of an international Cournot duopoly where two firms in domestic and foreign countries reciprocally supply their products to other countries through overseas production as well as export. It also considers the fact that the firms must incur export costs in addition to production costs. Thus, this paper shows, among others, that the effects of export policies on firms' output and export choices do not depend on the slopes of firms' reaction curves. It is also shown that firms' total outputs are independent of the export policies, and the optimal domestic and foreign export subsidies are zero (laissez-faire).     

Location and competition in retail banking

We investigate the impact of banking deregulation during the 1990s on consumer welfare. We estimate a spatial model of consumer demand for retail bank deposits that explicitly accounts for consumer disutility from distance traveled. This is important given the substantial changes in banks' branch networks observed in the data. Our model indicates that cross-price elasticities between banks whose branches are close to consumers (‘close’ banks) are larger than those between ‘far’ banks and more than double the cross-price elasticity of ‘close’ banks with respect to ‘far’ banks. We distinguish between thrifts and other banks and find that within-thrift competitive effects are stronger than within-bank effects or those between thrifts and banks. We use our estimates to predict the effect of changes in market structure on consumer welfare following the branching deregulation of the Riegle–Neal Act of 1994. Our results indicate that the median household gained around $60 per year from the changes. Approximately two thirds of the gains come from within-market changes in market structure. The gains were greater in markets with high initial numbers of banks than elsewhere.     

Bid Roundness Under Collusion in Japanese Procurement Auctions

We analyze the “roundness level” of bids—defined as the number of zeros at the end of the bid—in public procurement auctions for construction works in Okinawa Prefecture, Japan, where a bid-rigging case was filed. We hypothesize that bid rigging increases the roundness of bids through the bid coordination process. Specifically, winners choose round numbers to avoid any miscommunication when they announce their planned bids to other ring members, and losers prefer round numbers when they arbitrarily bid above the winning bid. We find that (1) there is a positive relationship between the roundness of a bid and its relative value as a fraction of the reserve price, (2) the roundness of bids is higher when collusion is active than when it is inactive, (3) among the ring bids, the roundness of the lowest bids is even higher than that of the other bids, and (4) bids by non-ring members are also round when collusion is active.     

Product R&D Investment Policies in an International Duopoly

This study analyzes the optimal product R&D investment policies of a developed and a developing country in an international Cournot duopoly where firms from these two countries compete through endogenous quality–quantity decisions. We explore a new international trade model by using demand functions derived from utility functions. We find that the optimal product R&D investment policies for both countries are subsidies. This study counters a finding that used Hotelling‐type demand functions and it partially modifies another result that adopted the same demand functions but with an international Bertrand duopoly.     

Development of educational program for production manager leading new perspectives on manufacturing technology

In this paper, we consider the problems associated with the development and management of an educational program for manufacturing managers in leadership roles who are making contributions towards the creation of customer delight as well as customer satisfaction using manufacturing technology. The basic concept combines an intelligent knowledge-based approach with the kaizen activity program within the framework of value creation and comparative advantage models based on a network referred to as Academia, Business, Consultancy, and Government (ABC-G). This educational program, which reflects the characteristics of manufacturing technologies and practices in the Hokuriku District of Japan, was developed in 2005–2006 and the trial education was developed in 2005 and 2006, and a trial run of this program was conducted in 2006 and 2007 in close collaboration with local manufacturing companies and their employees. The results are informative of the effects of educating manufacturing managers in Japan and the problems that will have to be overcome for the continuous improvement of the program.     

Acquirer-target social ties and merger outcomes

This article investigates the effect of social ties between acquirers and targets on merger performance. We find that the extent of cross-firm social connection between directors and senior executives at the acquiring and the target firms has a significantly negative effect on the abnormal returns to the acquirer and to the combined entity upon merger announcement. Moreover, acquirer-target social ties significantly increase the likelihood that the target firm?s chief executive officer (CEO) and a larger fraction of the target firm?s pre-acquisition board of directors remain on the board of the combined firm after the merger. In addition, we find that acquirer CEOs are more likely to receive bonuses and are more richly compensated for completing mergers with targets that are highly connected to the acquiring firms, that acquisitions are more likely to take place between two firms that are well connected to each other through social ties, and that such acquisitions are more likely to subsequently be divested for performance-related reasons. Taken together, our results suggest that social ties between the acquirer and the target lead to poorer decision making and lower value creation for shareholders overall.     

On the theory of monopolistic competition under demand uncertainty

Establishing a model of a monopolistically competitive industry in which risk-averse Cournot firms act under demand uncertainty and in which the output of individual firms and the number of firms in the industry are both endogenously determined by free entry and exit, this paper attempts to investigate the effects of demand uncertainty on the market equilibrium of a monopolistically competitive industry. It is assumed, for calculus simplification, that the firms are identical in the sense that they have the same monopolistic power and the same production technology. The paper presents some interesting and useful comparative statics results which are contrary to those proposed in the existing papers.This is a revised version of my paper which was firstly presented to the annual meeting of the Japanese Association of International Economics held in 1988 and then included partially in my book published in 1989. I am indebted to professors D. Bös, S. Fujino, M. Ohyama, M. Nishijima, to the members of the Public Economics Research Seminar in Bonn, and to two anonymous referees for their helpful discussions and useful suggestions. Any remaining errors, however, are my responsibility.     

Multinational Firms and Strategic FDI Subsidies

A simple three‐stage game model of an international Cournot duopoly, consisting of domestic and foreign multinational firms, is exploited to examine strategic FDI subsidies. While in the first stage the governments decide the optimal FDI subsidies, the firms endogenously choose their FDI levels (or subsidiary plant sizes) in the second stage and their output–export levels in the third stage. Thus, this paper finds that while the outflow and inflow FDI subsidies have different effects on firms’ FDI choices, the FDI subsidies are used as tools for the implementation of strategic policies and that the optimal FDI subsidies vary, depending on whether the governments assess labor employment.     

The cost-effectiveness of dulaglutide versus insulin glargine for the treatment of type 2 diabetes mellitus in Japan

Aims: Dulaglutide is a new once weekly glucagon-like peptide-1 (GLP-1) receptor agonist administered via a disposable auto-injection pen for the management of type 2 diabetes mellitus (T2DM). The objective of this study was to estimate the cost-effectiveness of dulaglutide vs insulin glargine for the management of T2DM from a Japanese healthcare perspective, in accordance with recently approved Japanese Cost-Effectiveness Guidelines.

Methods: The IQVIA CORE Diabetes Model (version 9) was used to estimate the long-term costs and effects of treatment with dulaglutide and insulin glargine. Direct comparative data from the Araki 2015 trial (NCT01584232) was used to inform the analysis. Costs associated with treatment and complications were derived from Japanese sources wherever possible and inflated to 2015 Japanese Yen (JPY). Utilities were based upon a European systematic review of diabetes utilities and adjusted for use in a Japanese population. One-way and probabilistic sensitivity analyses (OWSA and PSA) were conducted on all inputs and key modeling assumptions.

Results: Dulaglutide 0.75?mg was associated with higher quality-adjusted life years (QALYs), life years (LYs), and total costs, compared to insulin glargine, resulting in an incremental cost-effectiveness ratio (ICER) of 416,280 JPY/QALY gained. Treatment with dulaglutide increased the time alive and free from diabetes-related complications by 4 months. OWSA and PSA indicated that results were robust to plausible variations in input parameters and modeling assumptions.

Limitations: Key limitations of this study are similar to other cost-utility analyses of diabetes, including the extrapolation of short-term clinical trial data into lifelong durations. In addition, due to the lack of robust published Japanese data, some values were derived from non-Japanese sources.

Conclusions: This analysis suggests that dulaglutide 0.75?mg may be a cost-effective treatment alternative to insulin glargine for patients with T2DM in Japan.     

On the theory of east-west trade under uncertainty

Taking the final stage of the existing socialist economy as the labormanaged economy, this paper establishes a model of East-West trade between a capitalist economy and a labor-managed economy, both of which face asymmetric technological uncertainty. The model reflects the facts that the securities markets for firms' ownership shares exist only in the capitalist economy and that the firm's objective function in the capitalist economy is different from that in the labor-managed economy. It also considers the existence of international forward markets for commodities as international risk-sharing arrangements. Thus, the paper shows that all the basic theorems in traditional trade theory (Factor Price Equalization, Heckscher-Ohlin, Stolper-Samuelson and Rybczynski) carry over to the uncertain environments characterized by different types of economies.This is the final version of the paper, the first draft of which was presented at the 1987 annual meeting of the Japanese Association of International Economics. An earlier version has recently appeared in my book,Competition, Monopoly and International Trade Under Uncertainty (written in Japanese, Tokyo: Asian Economic New Press 1989). I wish to thank professors H. E. Leland, S. Fujino, H. Eguchi, M. Ohyama, K. Otaka, M. Ogawa, T. Ohsawa, K. Fukao, M. Nishijima and two anonymous referees for their helpful comments. Any remaining errors, however, are my responsibility.