The impact of e-commerce: It always benefits consumers, but may reduce social welfare

This paper investigates the impact of e-commerce on social welfare using a linear city model. Our model incorporates the diversity of consumers such that some can purchase the good via the Internet while others cannot. Our main result is as follows. The appearance of e-commerce enhances retail competition and always increases consumer surplus. However, total surplus does not necessarily improve. This is because the equilibrium market division between conventional stores and e-commerce is not socially optimal and efficiency loss of distribution accrues if the population of Internet shoppers is small and/or the cost of e-commerce is high. Our theoretical results indicate that the small e-commerce market share in the Japanese and US economies may result in welfare loss.     

Proportional income taxes and cores in a public goods economy

An equivalence relationship between cores and Pareto optimal allocations of a public goods economy where the public goods are to be provided through a proportional income tax is presented. For this purpose, the definition of the core is modified by allowing coalitions to tax their complements at any given rate. Also, a certain rule which specifies the rate is introduced.     

Term Structure of Interest Rates Under Recursive Preferences in Continuous Time

This paper proposes a testable continuous-time term-structure model with recursive utility to investigate structural relationships between the real economy and the term structure of real and nominal interest rates. In a representative-agent model with recursive utility and mean-reverting expectations on real output growth and inflation, this paper shows that, if (1) real short-term interest rates are high during economic booms and (2) the agent is comparatively risk-averse (less risk-averse) relative to time-separable utility, then a real yield curve slopes down (slopes up, respectively). Additionally, for the comparatively risk-averse agent, if (3) expected inflation is negatively correlated with the real output and its expected growth, then a nominal yield curve can slope up, regardless of the slope of the real yield curve.     

Parallel Consultant-Guided Search with Crossover

Consultant-guided search (CGS) is a recent metaheuristic method. This approach is an algorithm in which a virtual person called a client creates a solution based on consultation with a virtual person called a consultant. In this study, we propose a parallel CGS algorithm with a genetic algorithm’s crossover and selection, and calculate an approximation solution for the traveling salesman problem. We execute a computer experiment using the benchmark problems (TSPLIB). Our algorithm provides a solution with less than 3.3% error rate for problem instances using less than 6000 cities.     

A Factor Allocation Approach to Optimal Bond Portfolio

This paper proposes a new method to a bond portfolio problem in a multi-period setting. In particular, we apply a factor allocation approach to constructing the optimal bond portfolio in a class of multi-factor Gaussian yield curve models. In other words, we consider a bond portfolio problem in terms of a factors’ allocation problem. Thus, we can obtain clear interpretation about the relation between the change in the shape of a yield curve and dynamic optimal strategy, which is usually hard to be obtained due to high correlations among individual bonds. We first present a closed form solution of the optimal bond portfolio in a class of the multi-factor Gaussian term structure model. Then, we investigate the effects of various changes in the term structure on the optimal portfolio strategy through series of comparative statics.     

The role of innovation and quality change in Japanese economic growth

This paper explores the use of time series data to isolate quality change in the Japanese economy using a hedonic procedure. We argue that the traditional approach to hedonic estimation based upon panel data sets of different brands in a given product area is extremely resource intensive and, thus, unlikely to be adopted by official statistical bodies outside of key areas, such as computers. This paper adopts a “top-down” approach to see whether more traditional measures of technical change, such as patents, can be used to separate pure inflation from quality change. If this is possible, it offers a much simpler route to estimate the role of quality change in economic growth and performance. In practice, we extend the analysis not only to include patents, but other forms of intellectual property that might reflect technology and attribute changes, such as designs, utility models and trademarks. We begin by taking a longer-term historical perspective, exploring the development of indigenous inventive capacity in Japan during the early years when R&D data are not available. It is possible to show that the rise in utility models pre-dates the main growth in patenting activity, suggesting the development in more low-level indigenous creative work prior to higher level inventive activity. The principal aim of this paper, however, is to demonstrate that it is possible to develop robust models to explain changes in the producer price index in Japan, which can then be used to re-examine Japanese growth performance over the period from about 1960. If the official Japanese statistical body has fully accounted for quality change in the price indices (i.e. produced fully quality-constant price deflators), then the official estimates of growth will be correct. However, we provide strong evidence that this is not the case. Changes in quality, proxied by the IP variables, are important determinants of prices in Japan over the period 1960 to 1995 as a whole. Indeed, we provide evidence that the true rate of growth of the Japanese economy, taking into account the rate of quality change, is significantly higher than that suggested in official statistics.     

A note on the core of an income redistribution game

We consider a redistribution of income by an n-person game in which each member is levied a proportional income tax under some fixed rule. It is shown that the redistribution that will be achieved by a specific negative income tax is in the core of the game, which means that the redistribution can not be upset by any coalition of members acting strategically to evade the full taxation.     

Productivity of Foreign and Domestic Firms in the Malaysian Manufacturing Industry*

The relative position of total factor productivity (TFP) of both foreign and domestic ?rms in the manufacturing industry in Malaysia is estimated for three‐ and ?ve‐digit level subsectors. It was found that the differences between foreign and domestic ?rms varied widely from sector to sector. However, for the manufacturing industry as a whole, TFP was approximately the same for foreign and domestic ?rms for the period 1994–1996.