SIMULTANEOUS PRICE CHANGES,INFORMATION ACQUISITION ON COMMON COMPETITORS AND WELFARE*

We investigate a model where two firms choose whether to acquire information on a common competitor. We find that strategic complementarity on information acquisition exists, yielding multiple equilibria. In addition, we investigate welfare implication of information acquisition. We find that information acquisition reduces both consumer surplus and the total profits of the firms.     

Condorcet Jury Theorem or Rational Ignorance

We analyze a symmetric model of an election in which voters are uncertain about which of two alternatives is desirable for them. Each voter must incur some cost to acquire information about the alternatives. We show that by focusing on unbiased voting strategies, general symmetric signal structures can be degenerated to a two‐signal model. In addition, we show that for any sequence of unbiased voting equilibria, if the second‐order derivative of the information cost function at no information is zero, then the probability of electing the desirable alternative converges to one, that is, the Condorcet Jury Theorem is valid. Otherwise, this probability converges to some value less than one; that is, the “rational ignorance” hypothesis is valid.     

REALIZED COST‐BASED SUBSIDIES FOR STRATEGIC R&D INVESTMENTS WITH EX ANTE AND EX POST ASYMMETRIES*

We discuss stochastic cost‐reducing R&D investments and examine efficient subsidies. We discuss a two‐stage duopoly model in which each firm chooses R&D levels (innovation size and probability of success) in the first stage and competes à la Cournot in the second stage. We find that simple subsidies depending on the realized cost differences induce the efficient levels of R&D with respect to the innovation size and probability of success by two firms regardless of ex ante and ex post asymmetries between the two firms.     

Measuring a Dynamic Price Index Using Consumption Data

We propose a new method of constructing a dynamic price index (DPI). Under standard assumptions, our DPI is as stable as the Consumer Price Index (CPI). In certain periods, the DPI differs sharply from the CPI.     

JAPAN'S POSTWAR POPULATION AND LABOR FORCE

Although the sharp decline in the birth rate that marked the postwar years in Japan did not continue past the mid-1950's, the effects of this decline are being felt most dramatically some two decades later in an increasing manpower shortage problem. The labor shortage which now troubles Japan was created by the rapid absorption of surplus manpower reserves into the modernized industrial sectors of the economy during the period of accelerated economic growth after the war. But the problem has been considerably aggravated by the decline in manpower supply resulting from the falling-off of the birth rate in the postwar years. As the effects of this decline in the birth rate are going to be felt increasingly for years to come, it is of the greatest necessity that adequate manpower policies be devised to cope with the problems that are sure to arise.