Minimum Quality Standards under Asymmetric Duopoly with Endogenous Quality Ordering: A Note

In this note, we revisit minimum quality standards (MQS) under a vertically differentiated duopoly. We generalize the model in Ronnen (1991) and Valletti (2000) by introducing asymmetry into the fixed cost of quality improvement and by explicitly taking into account the endogeneity of quality ordering. In the generalized model, we show that the results derived by Ronnen (1991) and Valletti (2000) are largely robust.     

Estimating switching costs after introducing Fixed-Mobile Convergence in Japan

In this study, based on a conjoint-type survey analysis, the switching cost of several Japanese telecom services are empirically examined simultaneously, contingent on each carrier’s bundling strategies. The results suggest the following conclusions. The hierarchy of switching costs is mobile phone service, fixed phone service, ISP (Internet Service Provider), and broadband access service, in descending order. Even if the government prohibits the formerly state-owned monopoly NTT from forming alliances with other carriers, the legacy NTT group would still command more than half of the market share under FMC if each carrier adopts a pure bundling strategy. If mixed bundling emerges as the primary strategy in the FMC market, the resulting type of competition from the introduction of FMC does not stimulate competitive pricing.     

A COMPLETE CHARACTERIZATION OF THE INVERTED S‐SHAPED LABOR SUPPLY CURVE

Empirical evidence suggests that labor supply curves are downward sloping at low wage levels, i.e. ‘forward‐falling labor supply’. In contrast, the supply curve is only downward sloping at high wage levels in the canonical labor supply model, i.e. ‘backward‐bending’. This paper derives a labor supply curve with both forward‐falling and backward‐bending segments, or an ‘inverted S‐shape’ by incorporating two elements into a standard utility function: a subsistence level of consumption and a decreasing elasticity of substitution. It is also shown that the subsistence level of consumption plays a key role in determining the shape of the labor supply curve.     

A Note on the Endogenous Timing of Tariff Policy in the Presence of a Time Lag between Production and Trade Decisions

Using the Hamilton–Slutsky extended endogenous timing game of observable delay framework, we analyze the endogenous timing of tariff policy in the presence of a time lag between production and trade decisions. In particular, focusing on the strategic relationships between an importing country’s government and an exporting monopoly firm, we show that a natural Stackelberg situation exists in which the importing country’s government as first mover determines the tariff rate and the exporting monopoly firm as second mover determines the production level. We also find that the natural Stackelberg equilibrium is Pareto superior to both the Nash and alternative Stackelberg equilibria. This implies that commitment to an ex ante optimal tariff policy before the production decision is made is optimal for the affected parties.     

Finite-dimensional utilities

Summary. Sufficient axioms are identified for the existence of a finite- dimensional quasilinear utility function whose lexicographically ordered vectors preserve a decision maker's preference order on a mixture set . It is shown that those axioms are also necessary for the linear lexicographic representation when the underlying set is a mixture space. Received: August 20, 1998; revised version: December 14, 1998     

Micro-foundation for a constant elasticity of substitution production function through mechanization

We consider an increase in the range of capital use as a form of mechanization. A constant elasticity of substitution (CES) production function is dynamically derived from Leontief production functions through the endogenous complementary relationship between capital accumulation and mechanization. This implies that a CES production function can be resolved into technological change that does not involve changes in total factor productivity. Furthermore, using the normalizing procedure of the CES production function developed by de La Grandville [de La Grandville, O., 1989. In quest of the Slutsky diamond. American Economic Review 79, 468–481], we investigate how mechanization is related to the elasticity of substitution in our endogenous growth model.     

A flexible dynamic model of multiproduct technology for the West German economy

This paper tests symmetry and negativity of the Slutsky matrix for a system of demand functions derived from an aggregate model of multi product technology within a flexible dynamic framework. The model considers three inputs and three outputs, including imports and exports of intermediate goods. We derive a static demand model from a trans log cost function and specify the data generation process by a stationary ARX (1, 1) model. Results based on West German quarterly data indicate that the integrability conditions are not rejected when imposed on the ARX (1, 1) model, whereas they are rejected for all the less general dynamic models considered.     

A Note on Quality Choice,Monopoly, and Network Externality

Introducing network externalities into a model of vertically differentiated products, Lambertini and Orsini (2001, 2003) analyze the implications of a monopolist’s quality choice for social optimum. Moreover, they examine how the network externality affects quality, quantity, price, and social surplus. In this note, by looking at the nature of cost functions and the degree of network externalities, we reconsider their results, at least some of which depend upon the specificity of the cost functions.