The complexity of wholesale distribution channels in Japan

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

Parallel imports and the Japan Fair Trade Commission

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 imports but under the antimonopoly law of Japan as implemented by the Japan Fair Trade Commission such obstruction is per se illegal. To the extent that price discrimination is the rationale for obstruction of parallel imports the JFTC policy has promoted lower prices and increased economic welfare in Japan. But we argue that in several of the cases we examine the rationale for obstructing parallel imports was to preserve incentives for distributors to invest and innovate and to preserve efficient marketing arrangements that depended upon resale price maintenance

Is Japan's retail sector truly distinctive?

Based on statistical analysis of data for 17 countries, Japan's ubiquity of retail stores is largely predicted by its relatively small dwellings, geographic concentration, and high number of commercial vehicles relative to private ones, controlling for the effects of population density. All are factors that economic theory associates with density of retail outlets. This evidence refutes the widespread view that Japan's structure of retail trade is determined by cultural, historical, and regulatory factors unique to Japan

Explaining Productivity Variation among Smallholder Maize Farmers in Tanzania

Using a stochastic frontier production model proposed by Battese and Coelli (1995), the paper estimates the levels of technical efficiency of 233 smallholder maize farmers in Tanzania and provides an empirical analysis of the determinants of inefficiency with the aim of finding way to increase smallholders’ maize production and productivity. Results shows that smallholder productivity is very low and highly variable, ranging form 0.01t/ha to 6.77t/ha, averaging 1.19t/ha. Technical efficiencies of smallholder maize farmers range from 0.011 to 0.910 with a mean of 0.606. Low levels of education, lack of extension services, limited capital, land fragmentation, and unavailability and high input prices are found to have a negative effect on technical efficiency. Smallholder farmers using hand-hoe and farmers with cash incomes outside their farm holdings (petty business) are found to more efficient. However, farmers who use agrochemicals are found to be less efficient. Policy implications drawn from the results include a review of agricultural policy with regard to renewed public support to revamp the agricultural extension system, and interventions towards improving market infrastructure in order to reduce the transaction element in the input and output marketing.Productivity variation; smallholder farmers; technical efficiency; maize; tanzania

Demand uncertainty and price maintenance

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 maximizes total sales revenue. A minimum retail price that is binding in the low demand state can thus increase total revenue even though it saddles retailers with unsold merchandise. This "new" insight of Deneckere, Marvel, and Peck is actually a straightforward generalization of the model of full manufacturer reimbursement for returns developed in Flath and Nariu (1989). The ubiquity of full reimbursement for returns in Japan even though it is in theory merely a second-best way of achieving minimum retail price stipulations, reveals important aspects of manufacturer maintenance of retail prices having to do with enforcement problems, the allocation of risk-bearing and economic incentives. These aspects of resale price maintenance are relevant to the normative evaluation of the special exemptions for RPM that Japan's Fair Trade Commission has long maintained but is now phasing out

Endogenous Choice of Price or Quantity Contract with Upstream R&D Investment: Linear Pricing and Two-part Tariff Contract with Bargaining

We investigate the endogenous choice of strategic variable (a price or a quantity) by downstream firms in a two-tier industry in which an upstream firm performs the R&D investment. We show that when the upstream firm offers either linear discriminatory or uniform input price, it is a dominant strategy for each downstream firm to choose Bertrand competition when two products become relatively differentiated. Second, from the viewpoint of downstream firms, we show that Bertrand competition is more efficient than Cournot competition in some boundaries of Cournot equilibrium, which implies that each downstream firm faces a prisoners' dilemma under the Cournot equilibrium. However, when the downstream firms involve in centralized bargaining with an upstream firm to determine the two-part tariff discriminatory (uniform) input pricing contracts, we find that choosing price (quantity) contract is the dominant strategy for downstream firms. In this case, we further show that the level of social welfare is the same regardless of the mode of product market competition (i.e., Bertrand or Cournot)

Endogenous Choice of Price or Quantity Contract with Upstream R&D Investment: Linear Pricing and Two-part Tariff Contract with Bargaining

We investigate the endogenous choice of strategic variable (a price or a quantity) by downstream firms in a two-tier industry in which an upstream firm performs the R&D investment. We show that when the upstream firm offers either linear discriminatory or uniform input price, it is a dominant strategy for each downstream firm to choose Bertrand competition when two products become relatively differentiated. Second, from the viewpoint of downstream firms, we show that Bertrand competition is more efficient than Cournot competition in some boundaries of Cournot equilibrium, which implies that each downstream firm faces a prisoners' dilemma under the Cournot equilibrium. However, when the downstream firms involve in centralized bargaining with an upstream firm to determine the two-part tariff discriminatory (uniform) input pricing contracts, we find that choosing price (quantity) contract is the dominant strategy for downstream firms. In this case, we further show that the level of social welfare is the same regardless of the mode of product market competition (i.e., Bertrand or Cournot)