{"title":"Populism, Fairness and Competition: Should We Care and What Could We Do?","authors":"Frederic Jenny","doi":"10.1111/jere.12232","DOIUrl":"https://doi.org/10.1111/jere.12232","url":null,"abstract":"<p>The rise of populism in a number of countries is one of the most visible signs of the weakening of enthusiasm for trade liberalization and market competition. Market competition is increasingly denounced as leading to unfair results by those who lose jobs, and in some cases risk losing their employment prospects because of the pressure of competition, or those who see their wages stagnate or be reduced. Their perception is that pro-competitive policies benefit capitalists and a small coterie of highly skilled workers to the detriment of the low-skilled majority. In a number of countries there have been calls by politicians to reconsider the trade liberalization policy which was actively pursued in recent decades and to change the standard applied by competition law enforcers from a strict consumer welfare standard to a consideration of the trade-off between efficiency and fairness. The competition community has, to a large extent, strongly resisted such possibilities, arguing that protectionist policies had failed in the past and that the concept of fairness is at best vague, lack economic foundation, and could lead to a weakening of incentives to achieve efficient static and dynamic performances. The article examines three issues related to this debate. First, we examine the theoretical and practical reasons for which some categories of workers lose in the competitive process. Second, we discuss the relationship between inequality and fairness and the contribution of behavioural economics to the exploration of what people consider to be fair or unfair in vertical relationships (i.e. between employees and employers or between consumers and suppliers). Third, we discuss alternative ways in which competition authorities could reconcile fairness and efficiency in their advocacy or enforcement activities.</p>","PeriodicalId":45642,"journal":{"name":"Japanese Economic Review","volume":"70 3","pages":"280-297"},"PeriodicalIF":1.2,"publicationDate":"2019-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/jere.12232","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"92200465","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Patent Statistics as an Innovation Indicator? Evidence from the Hard Disk Drive Industry","authors":"Mitsuru Igami, Jai Subrahmanyam","doi":"10.1111/jere.12234","DOIUrl":"https://doi.org/10.1111/jere.12234","url":null,"abstract":"<p>We assess the usefulness of patent statistics as an indicator of innovation, using a direct measure of innovation in the hard disk industry (1976–1998). Three findings emerge: (i) patents “predict” innovations better than a random guess, and a simple refinement makes them more useful; (ii) conditional on actually innovating, conglomerates and larger firms patent more than specialised startups and smaller firms; and (iii) patent reforms seem to make the patent–innovation relationship nonstationary. These results suggest that researchers should use caution when comparing patents of different types of firms and across years.</p>","PeriodicalId":45642,"journal":{"name":"Japanese Economic Review","volume":"70 3","pages":"308-330"},"PeriodicalIF":1.2,"publicationDate":"2019-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/jere.12234","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"92199441","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Price Effects of Target Ratcheting: A Progress Report on Medical Devices","authors":"Daiya Isogawa, Hiroshi Ohashi","doi":"10.1111/jere.12235","DOIUrl":"https://doi.org/10.1111/jere.12235","url":null,"abstract":"Regulators, who have asymmetric information concerning the technology of regulated firms, often rely on incentive‐based regulation. While such a scheme is well known to be vulnerable to the adverse incentives of regulated firms, empirical research that quantifies the magnitude of distortion caused by incentive regulation is scarce. This paper is a progress report of our recent project on target ratcheting with an application to medical devices in Japan. A casual observation of detailed product‐level transaction data and reduced‐form analyses indicate the existence of pricing distortion in the wholesale market. The paper also proposes a two‐period bilateral bargaining model to match the data. A preliminary analysis finds evidence consistent with the hypothesis that target ratcheting distorts the pricing of regulated firms, but the magnitude of the distortion is estimated to be economically small.","PeriodicalId":45642,"journal":{"name":"Japanese Economic Review","volume":"70 3","pages":"331-340"},"PeriodicalIF":1.2,"publicationDate":"2019-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/jere.12235","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"92291645","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Mix-and-match divestitures and merger harm","authors":"Simon Loertscher, Leslie M. Marx","doi":"10.1111/jere.12237","DOIUrl":"https://doi.org/10.1111/jere.12237","url":null,"abstract":"<p>We consider the effects of a merger combined with a divestiture that mixes and matches the assets of the two pre-merger suppliers into one higher-cost and one lower-cost post-merger supplier. Such mix-and-match transactions leave the number of suppliers in a market unchanged but, as we show, can be procompetitive or anticompetitive depending on whether buyers are powerful and on the extent of outside competition. A powerful buyer can benefit from a divestiture that creates a lower-cost supplier, even if it causes the second-lowest cost to increase. In contrast, a buyer without power is always harmed by a weakening of the competitive constraint on the lowest-cost supplier.</p>","PeriodicalId":45642,"journal":{"name":"Japanese Economic Review","volume":"70 3","pages":"346-366"},"PeriodicalIF":1.2,"publicationDate":"2019-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/jere.12237","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"92301168","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Equilibrium Effects of Superstition in the Housing Market","authors":"Jiawei Chen, Matthew Shum","doi":"10.1111/jere.12236","DOIUrl":"https://doi.org/10.1111/jere.12236","url":null,"abstract":"<p>We investigate the interaction of product quality differentiation and consumer preference heterogeneity in durable goods markets, focusing on the effects of secondary market liquidity and consumer heterogeneity on equilibrium prices. We build an infinite-horizon dynamic model of the apartments housing market that captures the above features. Some apartments are considered lucky, and some consumers are superstitious. Lucky apartments are valued more highly than non-lucky ones only by superstitious consumers. Results show that the difference between the lucky apartment price and the non-lucky apartment price becomes smaller when the secondary market becomes less liquid and when consumers’ preference heterogeneity becomes more persistent as opposed to time-varying.</p>","PeriodicalId":45642,"journal":{"name":"Japanese Economic Review","volume":"70 3","pages":"341-345"},"PeriodicalIF":1.2,"publicationDate":"2019-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/jere.12236","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"92299107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Potential Compensation Principle and Constant Marginal Utility of Income","authors":"Stephen Martin","doi":"10.1111/jere.12240","DOIUrl":"10.1111/jere.12240","url":null,"abstract":"<p>In policy applications, industrial economists are wont to invoke the Kaldor–Hicks potential compensation principle to justify the use of deadweight loss as a measure of the welfare cost of market power. This usage rests on two assumptions. One of these assumptions, that changes in consumer and producer surplus are weighted equally, is well understood. The other assumption, that the marginal utility of income is constant, receives less attention. In a simple model, I show that if there is decreasing marginal utility of income, the use of deadweight loss as an index of market performance rests on shaky ground.</p>","PeriodicalId":45642,"journal":{"name":"Japanese Economic Review","volume":"70 3","pages":"383-393"},"PeriodicalIF":1.2,"publicationDate":"2019-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/jere.12240","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88713606","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Relational Contracting in Developed Economies: Lessons From Slot Exchanges in the US Airline Industry","authors":"Ricard Gil, Myongjin Kim, Giorgio Zanarone","doi":"10.1111/jere.12243","DOIUrl":"https://doi.org/10.1111/jere.12243","url":null,"abstract":"<p>This paper highlights the widespread use of relational contracting in developed economies. While the number of empirical studies on relational practices in developing countries is increasing rapidly, evidence from industries and countries characterised by strong institutions is lagging behind due to data constraints. We argue that technological progress and strong institutions do not diminish the use of relational contracting, and use the US airline industry as a case in point. In particular, we discuss a number of factors (including transaction complexity, existence of collaborative relationships and data availability) that make this industry an ideal setting to study relational contracting in a developed economy. Moreover, we argue that other industries in developed countries share the properties of the US airline industry and, hence, can be used as a basis to investigate relational contracting in future work.</p>","PeriodicalId":45642,"journal":{"name":"Japanese Economic Review","volume":"70 3","pages":"411-421"},"PeriodicalIF":1.2,"publicationDate":"2019-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/jere.12243","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"92297766","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Forensic Econometrics: Demand Estimation When Data are Missing","authors":"Julian Hidalgo, Michelle Sovinsky","doi":"10.1111/jere.12242","DOIUrl":"10.1111/jere.12242","url":null,"abstract":"<p>Often empirical researchers face many data constraints when estimating models of demand. These constraints can sometimes prevent adequate evaluation of policies. In this article, we discuss two such missing data problems that arise frequently: missing data on prices and missing information on the size of the potential market. We present some ways to overcome these limitations in the context of two recent research projects. Jacobi and Sovinsky (2018), which addresses how to incorporate unobserved price heterogeneity, and Hidalgo and Sovinsky (2018), which focuses on how to use modelling techniques to estimate missing market size. Our aim is to provide a starting point for thinking about ways to overcome common data issues.</p>","PeriodicalId":45642,"journal":{"name":"Japanese Economic Review","volume":"70 3","pages":"403-410"},"PeriodicalIF":1.2,"publicationDate":"2019-08-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/jere.12242","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75135812","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Fake Sales: A Dynamic Pricing Perspective","authors":"Daniel F. Garrett","doi":"10.1111/jere.12239","DOIUrl":"https://doi.org/10.1111/jere.12239","url":null,"abstract":"<p>Some sellers display high “regular” prices, but mark down these prices the vast majority of the time, advertising the good as “on sale” or “discounted”. This note suggests a framework for understanding the practice, emphasising the role of buyer uncertainty about their future valuations for the good. We argue that so-called “regular” prices set buyers’ expectations regarding future prices, expectations that need not be tethered to the prices actually set. By manipulating upwards buyers’ expectations of future prices, the seller can increase demand for the good at the current “sale” price, increasing profits.</p>","PeriodicalId":45642,"journal":{"name":"Japanese Economic Review","volume":"70 3","pages":"375-382"},"PeriodicalIF":1.2,"publicationDate":"2019-08-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/jere.12239","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"92297271","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}