David Flath

• Ritsumeikan University

A four-equation structural model of the Japanese newspaper publishing industry supply and demand for subscriptions and advertising is constructed from aggregate data and used to infer the effect of changing demand for newspaper advertising on industry prices, output, and profit. In 2017, Japanese newspaper advertising revenue, adjusted for inflatio...

We develop a model in which each of m manufacturers forms a differentiated final product by assembling n components that are provided by its own n independent suppliers. Each supplier produces a unique component and sells to only one of the manufacturers. The manufacturers engage in product‐differentiated Cournot competition. We show that if initia...

This study examines whether government banks generally promote financial intermediation or impede it. Using a cross-country dataset, we estimate econometric models that identify the effect of government-owned banks on the overall extent of financial intermediation. To conduct our analysis, we propose and estimate a new measure of financial developm...

Many countries, mostly ones with developing economies, still have conscription. This study explains why, based on the costs of different recruitment systems. A conscription system can be costly to set up, and misallocates labor compared to all-volunteer recruitment, but entails a smaller wage bill. In a developing country with a highly distorting t...

In Japan, the newspaper publishers with the greatest daily circulation offer both morning and evening editions in most of their distribution areas, and many of them allow their customers to choose between morning-only and morning-and-evening subscriptions. Each such newspaper publisher, in setting the subscription prices and numbers of pages of con...

In Japan, newspapers enjoy a special exemption from antimonopoly prohibitions against resale price maintenance (suppliers' stipulations that bar downstream firms from price discounting). However, if a newspaper company does stipulate retail prices, it is required to set uniform prices throughout Japan. Econometric analysis here shows that Japanese...

This paper analyzes platform selection (affiliation) by game developers in the Japanese home video game industry. We develop an elementary model of affiliation by software developers and propose the hypothesis that wider availability of game titles for a platform positively inclines game developers to affiliate with that platform when releasing new...

This is a broad survey of recent academic research on Japan’s economy, mostly published in the last ten years, all of it in English. The research described here spans many fields of economics. The article is intended as a bibliographic aid for economics scholars and students who want to explore the many creative ways that economics is being applied...

We consider a variant of the newsvendor problem. Atomistic retailers each buy merchandise from a monopoly supplier for resale at a market‐determined common retail price that depends upon the total industry order quantity and upon a stochastic demand. After the orders are filled, the supplier learns the realization of demand but the retailers do not...

In Japan, newspapers enjoy a special exemption from antimonopoly prohibitions against resale price maintenance (suppliers' stipulations that bar downstream firms from price discounting), but are each required to set uniform prices throughout Japan. In fact, the newspapers have rarely changed their subscription prices in recent years, and the three...

In Japan, the newspapers with the greatest daily circulation offer both morning and evening editions in most of their distribution areas. Their prices per page of actual content are different for morning-and-evening subscribers than for morning-only subscribers. So the subscription price schedules could be described as sliding scales. These are tar...

In Japan, newspapers enjoy a special exemption from antimonopoly prohibitionsagainst resale price maintenance (suppliers' stipulations that bar downstreamfirms from price discounting), but are each required to set uniform pricesthroughout Japan. In fact, the newspapers have rarely changed their subscriptionprices in recent years, and the three lead...

For 70 Japanese manufacturing industries, I test the simple Cournot hypothesis of proportionality between industry price-cost margin and Herfindahl index against the non-nested alternative that the industry price-cost margin remains constant in the face of varying Herfindahl index, as it would under a simple product differentiated Bertrand framewor...

The leading economic explanation for tipping -that is, explanation why the practice is socially beneficial, not why individuals leave tips even though it is not narrowly advantageous to them- is that it confers an incentive to provide personal services. This fits many instances in which tipping is common but does not fit the taxicab business very w...

The "Great Stagnation" of this book's title is the economic slowdown in Japan from 1991 until at least 2005, when the book was written. It is a collection of nine essays by 17 authors, including prominent economists from Japan, the United States, and Europe. The recent U.S. financial crisis, which occurred only after this volume went to press, will...

For 70 Japanese manufacturing industries, I test the simple Cournot hypothesis of proportionality between industry price-cost margin and Herfindahl index against the non-nested alternative that the industry price-cost margin remains constant in the face of varying Herfindahl index, as it would under a simple product differentiated Bertrand framewor...

We review the facts pertaining to some recent antimonopoly cases in Japan involving interference with unauthorized imports, so-called parallel imports, and propose economic explanations for the behavior of the foreign manufacturers in these cases. Japan's intellectual property law provides a mechanism for private obstruction of parallel imports, bu...

A measure of number of steps in the wholesale distribution chain is proposed and calculated for Japan, the United States, and Germany and for different kinds of business within Japan and within the United States. Economic factors that influence the number of wholesale steps in the distribution channel are examined in relation to these data.

This paper proposes a model of a cruising taxicab industry under laissez faire pricing and free entry, and compares it with alternative regimes including collusive fare setting, collusive restrictions on entry, or both. In the model, under laissez faire, prices are determined by Nash bargaining with complete information and lie above marginal costs...

Directed marketing channels--known in Japan as distribution keiretsu--are more likely than others to be headed by a primary wholesaler that is vertically integrated with the manufacturer, which for foreign manufacturers entails their directly investing in Japan-based wholesale subsidiaries. I support this statement with empirical evidence and theor...

In this paper, we use a spatial competition model developed by Pal (1998) to analyze producer imposed retail price ceilings and producer assigned exclusive geographic sales territories. Two wholesale distributors are presumed to each have a single collection point respectively from which they supply retail outlets at many locations. Each wholesaler...

In this paper, I present empirical evidence for …ve European countries (Germany, France, UK, Spain and Italy) and the Euro-zone on whether monetary policy shocks produce di¤erent e¤ects on real output growth depending on the phase of the business cycle that the economy is undergoing (the socalled ‘state’ asymmetry). To do so, I apply a multivariate...

An independent wholesaler with many different upstream suppliers is likely to be better at market coverage than if it were the subsidiary of just one supplier. But where wholesale efforts are focused on resolving externalities (by establishing and administering a directed marketing channel), efforts at expanding market coverage have greater margina...

This paper compiles facts on the distribution sector of Japan and puts them in historical and international context, expresses in a coherent way the conventional view that the peculiar features of Japan?s distribution sector are due to distorting government regulations, and provides new evidence that bears on the truthfulness of that proposition. W...

No Abtract

We review the facts pertaining to some recent antimonopoly cases in Japan involving interference with unauthorized imports, so-called parallel imports, and propose economic explanations for the behavior of the foreign manufacturers in these cases. The intellectual property law of Japan provides a mechanism for private obstruction of parallel import...

Since 1951 the Japanese ministry of transport has been vested with sweeping authority to restrict entry and set prices in commercial trucking. Perhaps it could have used this authority to cartelize the industry. The weight of evidence holds that it did not do so. There is little to suggest that the standard price schedules that the MOT continues to...

If unilateral free trade is the best policy, then why are international treaties needed to achieve it? The reason may be found in the Becker theory of competition among political pressure groups. By entering wide-ranging negotiations, nations shift the political question from one of protecting a single industry to one of protecting many industries....

No Abtract

Business groups have been an important feature of Japan’s industrial organization since at least the beginning of the 20th century. As early as the 1870s there had already emerged the Yasuda banking complex, Mitsubishi shipping conglomerate and Mitsui trading company, all of which later became the cornerstones of the vast commercial empires known a...

When retailers must commit to shipment quantities prior to resolution of demand uncertainty, manufacturer stipulation of a minimum retail price is likely to be profitable for the manufacturer and not damaging to the retailers. The reason is simple: if demand turns out to be low, the unfettered market-clearing price can lie below the price that maxi...

When retailers must commit to shipment quantities prior to resolution of demand uncertainty, manufacturer stipulation of a minimum retail price is likely to be profitable for the manufacturer and not damaging to the retailers. The reason is simple. If demand turns out to be low, the unfettered market-clearing price can lie below the price that maxi...

Despite recent upheavals, Japan remains one of the dominant economic powers. Yet the Japanese economy is one of the most misunderstood phenomena in the modern world. Conventionally, Japan is presented as the exception to mainstream economic theory: an exception to the standard models of modern economics. This book demolishes that notion, bringing t...

In this paper, I present empirical evidence for …ve European countries (Germany, France, UK, Spain and Italy) and the Euro-zone on whether monetary policy shocks produce di¤erent e¤ects on real output growth depending on the phase of the business cycle that the economy is undergoing (the socalled ‘state’ asymmetry). To do so, I apply a multivariate...

Why do large firms in Japan hold small percentags of stock in trading partners? A firm that holds stock in a trading partner weakens its own bargaining position, for a portion of its own gain from trade then includes a share interest in the partner's gain from trade, but precisely for this reason the firm can at any time penalize the trading partne...

"Antitrust concern about keiretsu shareholding ties is misplaced and at odds with economic reasoning and with empirical investigation. Holding stock in a trading partner slants the bargaining over product market variables in favor of the trading partner. Divesting such a stock interest accomplishes the reverse. The firm holding shares in a trading...

Largest debtholders in keiretsu member companies hold more stock if the companies have high debt-to-equity ratios or have weaker collateral, greater prospects of growth, or unique aspects. All are factors associated with the agency problems of debt that stockholding by a debtholder can help to resolve. The stockholding also induces greater borrowin...

A new measure of indirect shareholding is proposed and estimated for Japan's six major keiretsu groups. For these groups indirect shareholding by each firm in each other firm is about one fourth as great as direct shareholding on average. Where there are gains to firms from holding stock in other firms, there are also gains from indirect stockholdi...

Horizontal shareholding interlocks induce Cournot industries to restrict production. The cartelizing effects of horizontal shareholding interlocks are greater if firms are mindful of indirect shareholding links than if only attentive to direct links. Indirect shareholding exists when a firm A holds stock in B and B holds stock in C. Several algebra...

The cartelizing effects of firms' shareholding in rivals have been well established theoretically, yet empirical instances of such are rate to nonexistent. It is argued here that if the stock market is efficient in the sense that share prices reflect post-share trading product market equilibria, then acquiring shares in rivals is not subgame perfec...

In this paper, I present empirical evidence for …ve European countries (Germany, France, UK, Spain and Italy) and the Euro-zone on whether monetary policy shocks produce di¤erent e¤ects on real output growth depending on the phase of the business cycle that the economy is undergoing (the socalled ‘state’ asymmetry). To do so, I apply a multivariate...

Abstract Banks and insurance companies,in Japan have been more,inclined to hold stock directly and indirectly in clients that borrow more intensely from them, based on analysis of 1980 data. This evidence is consistent with the rationale for such stockholding being to resolve agency problems of debt. In carrying out this investigation a new measure...

Vertically related Cournot oligopolies trading at arms' length produce more output when upstream firms own equity shares in downstream firms, particularly when the equity shares are exclusive in the sense that no two upstream firms own shares in the same downstream firm. Shareholding by downstream firms in upstream firms has either the opposite eff...

Liberal acceptance of returns and resale price maintenance both enable a maker who must produce before knowing the true demand to set a price and stick to it. It is profitable for the maker to fix the price when the demand for a good or the good itself is perishable, the scale of demand is uncertain but the elasticity is known, and the unit costs o...

In this paper, I present empirical evidence for …ve European countries (Germany, France, UK, Spain and Italy) and the Euro-zone on whether monetary policy shocks produce di¤erent e¤ects on real output growth depending on the phase of the business cycle that the economy is undergoing (the socalled ‘state’ asymmetry). To do so, I apply a multivariate...

The extent of a manager's shareholdings in his employing firm is modelled as part (along with the extent of reliance on incentive contracting) of an "optimal contract" between the manager and other shareholders. Implications are that manager shareholding will be less in firms with greater variance of shareholder income and in non-cash businesses. E...

The extreme reliance on debt that has been a persistent feature of corporate finance in contemporary Japan is at least partially due to low personal tax rates. This statement is supported by comparison of Japan and U.S. taxes based on the taxes and failure cost theory of finance.

Successive Cournot-Nash industries yield a higher final price the more concentrated at each stage and the less completely vertically integrated, they are but will not remain incompletely vertically integrated if mergers are costless.

Short-term leasing is an everyday occurrence. Tax savings cannot account for the ubiquity of leasing by temporary users. Monopoly explanations are inconsistent with concurrent leasing and selling markets for perfect substitutes. Leasing economizes upon the costs of detecting, assuring, and maintaining quality, costs of search, and costs of risk-bea...

SINCE 1958 WHEN FRANCO Modigliani and Merton Miller (M-M) provided the first proof, invariance propositions have been central to the theory of corporate finance. M-M stated their proposition in two equivalent forms: that the "value of a firm is independent of its capital structure" and that "the average cost of capital to any firm is completely ind...

The authors compare the application of two logit models for the analysis of qualitative marketing data. A weighted least squares logit model is compared with a maximum likelihood logit model different from that mentioned by Green et al. Empirical applications are used to compare the models. Suggestions are presented for interpreting and reporting t...

The authors compare the application of two logit models for the analysis of qualitative marketing data. A weighted least squares logit model is compared with a maximum likelihood logit model different from that mentioned by Green et ai. Empirical applications are used to compare the models. Suggestions are presented for interpreting and reporting t...

In this paper, we use a spatial competition model developed by Pal (1998) to analyze producer imposed retail price ceilings and producer assigned exclusive geographic sales territories. Two wholesale distributors are presumed to each have a single collection point respectively from which they supply retail outlets at many locations. Each wholesaler...