A spatial tax harmonization model

Policies to harmonize value-added tax rates are controversial in the European Union. This paper formulates a multi-country model over a one-dimensional space as a non-cooperative Nash game, in which each country aims at maximizing its tax revenue, subject to the constraint that its tax rate lies within a given common band. Then we examine the effects of changes in the common band on tax rates, tax revenues and the number of cross-border shoppers at Nash equilibrium. We also analyze the effects of geographical variation in country size and location.     

The Identifiability of Independent Competing Risks Models with Multiple Spells

Models of independent competing risks with multiple spells are becoming popular in the analysis of economic duration data. This paper considers their identifiability.     

Learning from a rival bank and lending boom

When bankers observe a rival winning in the interbank competition for lending to a firm, they infer that the firm may be more promising than they had thought. From this consideration, they loosen their creditworthiness tests and lower the interest rates they offer in the next lending competition for the firm. Increased interbank competition reduces the impact of this observational learning and decreases the credit risk taken by each bank because of a severe winner's curse, while it increases the aggregate risk taken by the entire banking sector.     

A dynamic von Thünen model with a demand function

This paper examines the dynamic processes of agricultural land use in the context of the von Thünen model. Consumers purchase agricultural goods to maximize their utility levels; farmers plant agricultural goods only once in a year and they decide their land use according to the last year's prices. In this context, it is first shown that land use is generally unstable for a broad class of utility functions, although the equilibrium land use is achieved in a very specific case. Second, it is shown that under a certain condition, land use changes cyclically with 2-year intervals.     

Consensus building in safety and security: a case study of Fukushima evacuees returning home

This study examines consensus building in environmental and energy policies by analyzing the minutes of the safety and security committee of the Nuclear Regulation Authority (NRA) of the Japanese government, in the context of the discussion of the safe return of Fukushima evacuees after the 2011 Great East Japan Earthquake and Tsunami and the subsequent Fukushima nuclear disaster. One important issue associated with evacuation policies was the high number of evacuees, if not all, who were not willing to return to their old homes. Although the contents of governmental committee meetings are freely accessible through the internet, they have been rarely analyzed for these purposes. In this study, we used text-mining techniques to analyze NRA committee minutes quantitatively and qualitatively. We have three primary findings. First, the committee attempted to take evacuees’ feelings into account and pragmatically discuss what was needed to restore their lives and livelihoods, as well as to make its meetings transparent and open to the public by, for example, streaming them live on the internet. Second, in earlier committee meetings, government representatives insisted on specific policies made by themselves to control the return of evacuees. However, outside experts at the meetings convinced representatives that decisions regarding issues surrounding the safe return of evacuees should consider the opinions of the evacuees themselves. Third, the NRA reported the outcome of the meetings at a Cabinet meeting to accelerate policies requiring urgent implementation as well as those related to the alleviation of people’s anxieties regarding exposure to radioactivity or those related to equal treatment among those who wanted to voluntarily move away from the affected areas versus those who want to return to their homes. Finally, this analysis further identified a number of issues concerning citizen participation and governance associated with environment and energy policies, all of which need to be overcome in order to establish consensus among concerned stakeholders.     

Differentiating use and nonuse values for coastal pond water quality improvements

This paper measures the benefits of water quality improvements in three coastal ponds on the island of Martha's Vineyard, Massachusetts, U.S.A. Use, option, and existence values were elicited from Martha's Vineyard property owners by the contingent valuation method. On average, more than half of the total benefits are attributed to existence value. Results from the Heckman selection model show that the exclusion of protest, as well as missing bids, does not cause significant bias in estimating respondents' willingness-to-pay. Socioeconomic characteristics are found to have distinctively different influences on use, option, and existence values. Different model parameters are likely to be estimated depending on which value categories are measured by a selected valuation technique. These findings emphasize the importance of nonuse values from water quality improvements and of socioeconomic characteristics for measuring different categories of values.Associate Scientist, the Marine Policy Center, Woods Hole Oceanographic Institution. Support for this research was provided by the Pew Charitable Trust, and the Marine Policy Center. Thanks are due Elliot Backerman for making the data available to the author, and Peter Britz and Sarah Repetto for research assistance. Comments and suggestions on an earlier draft of this paper from Steven Edwards, A. Myrick Freeman, Porter Hoagland, Raymond Kopp, V. Kerry Smith and two anonymous reviewers are gratefully acknowledged. This article is WHOI Contribution No. 7752.     

On the rate of convergence of oligopoly equilibria in large markets: An example

In this note we explore the rate of convergence of Cournot-Nash equilibria with free entry and those with an entry deterring monopolist in a replicated market where the market demand functions is linear and firms face linear cost curves.     

From duty to right: The role of public education in the transition to aging societies

This paper argues that the introduction of compulsory schooling in early industrialization promoted the growth process that eventually led to a vicious cycle of population aging and negative pressure on education policy. In the early phases of industrialization, public education was undesirable for the young poor who relied on child labor. Compulsory schooling therefore discouraged childbirth, while the accompanying industrialization stimulated their demand for education. The subsequent rise in the share of the old population, however, limited government resources for education, placing heavier financial burdens on the young. This induced further fertility decline and population aging, and the resulting cycle may have delayed the growth of advanced economies in the last few decades.     

Lending competition and credit availability for new firms: Empirical study with the price cost margin in regional loan markets

In this paper, I present statistical evidence of the impact of lending competition on credit availability for new firms. A discrete-time duration analysis with respect to the years from the start-up to the first loan approval by a commercial bank or a cooperative bank, which is collected from survey data in Japan, shows that the higher price cost margin (PCM) of banks, which reflects the existence of a quasi-rent for a bank, improves the credit availability for younger firms. Additional analysis to detect the regional determinants of the PCM of banks shows that the share of larger banks in each local credit market has a negative and significant impact on the PCM. In light of the existing empirical finding that smaller banks are more likely to provide relationship banking, these findings provide indirect evidence for the hypothesis that the intensity of relationship banking in each local credit market increases the PCM and this encourages banks to extend a loan to new firms so that they can pre-empt the opportunity to establish lending relationships that are expected to yield such quasi-rents.