Keisaku Higashida

Misleading Advertising in Duopoly

This paper builds a model of strategic misleading advertising in duopolistic markets with horizontal product differentiation and advertising externality between firms. We investigate the effects of regulating misinformation on market competition, behaviour of firms, and social welfare. We show that the degree of advertising externality and the magnitude of advertising costs are crucial for determining the welfare effects of several regulations, including prohibiting misleading advertising, educating consumers, taxing production, and taxing misleading advertising. We extend the model by introducing heterogeneous consumers, heterogeneous production costs between firms, and the degree of advertising informativeness. Our results have important policy implications for the debate regarding regulation of advertising, especially direct-to-consumer advertising for prescription and over-the-counter drugs.

What information is needed for welfare-enhancing policies under international oligopoly?

Abstract In the framework of international Cournot oligopoly, we analyze welfare-enhancing policies when policymakers have only limited information on demand and cost structures. We show that even if policymakers have no idea about costs and demand, they can raise welfare by introducing a small production subsidy. If the government knows that demand is not very convex, a small tariff can be used to enhance welfare. With strategic complements, a small import reduction by an import quota deteriorates welfare while a small increase in the number of domestic firms improves welfare. In other cases, some more information is required to determine right policies.

Misleading Advertising in Duopoly (Publicité Mensongère Dans Un Duopole)

This paper builds a model of strategic misleading advertising in duopolistic markets with horizontal product differentiation and advertising externality between firms. We investigate the effects of regulating misinformation on market competition, behaviour of firms, and social welfare. We show that the degree of advertising externality and the magnitude of advertising costs are crucial for determining the welfare effects of several regulations, including prohibiting misleading advertising, educating consumers, taxing production, and taxing misleading advertising. We extend the model by introducing heterogeneous consumers, heterogeneous production costs between firms, and the degree of advertising informativeness. Our results have important policy implications for the debate regarding regulation of advertising, especially direct-to-consumer advertising for prescription and over-the-counter drugs.

Misleading advertising and minimum quality standards

This paper examines the relationship between misinformation about product quality and quality standards, such as minimum quality standards (MQSs) and certification criteria, when products are vertically differentiated in terms of their health/safety aspects. We investigate the welfare effect of regulating misinformation and strengthening MQSs. We find that the welfare effect of a decrease in misinformation crucially depends on the existing amount of misinformation; moreover, a more stringent MQS either improves or deteriorates welfare. Two effects figure strongly throughout our results. First, changes in misinformation and/or an MQS make price competition between firms more or less serious, causing changes in price and quantity. Second, these changes influence some consumers’ choices, leading them to change the products that they purchase. This change in consumption behavior increases or decreases inappropriate choices when misinformation is present. We extend the analysis to the case in which a high-quality firm’s quality investment is endogenously determined.

Determinants of trade in recyclable wastes: evidence from commodity-based trade of waste and scrap

This paper examines factors that affect the trade of recyclable waste in both exporting and importing countries. To this end, we employ two important elements: first, we adopt a gravity model in our empirical methodology; second, we select five waste and scrap commodities and undertake estimations using commodity-level trade data. We demonstrate that, the higher the wage/per capita GDP/population of an importing country, the more recyclable wastes it imports. This result suggests that the demand for final goods and, accordingly, the demand for materials including recycled material, have strong effects on the import volume of recyclable waste. Moreover, this implies that the imports of a developing country from developed countries increase with expanding industrial activity and economic growth. We find no evidence for a pollution haven for wastes and recycling.

Who Benefits from Misleading Advertising

We develop a Hotelling model of horizontally and vertically differentiated brands with misleading advertising competition. We investigate the question of who benefits or loses from the misinformation created by advertising competition and related regulatory policies. We show that the quality gaps between two brands are crucial for determining the effect of misinformation on the firms’ profits, aggregate or individual consumer surplus, and national welfare. Although the misinformation tricks consumers into buying products that they would not have purchased otherwise, it may improve welfare even if the advertising does not expand the overall demand for the brands. We also show that, although endogenous advertising competition may lead to a prisoner’s dilemma for firms, it makes some consumers better off. We also consider the effects of several regulatory policies, such as advertising taxes, ad valorem and unit taxes on production, comprehensive and partial prohibitions of misleading advertising, government provisions of quality certification or counter-information, and the education of consumers.

Should the trade of hazardous waste be uniformly regulated? An empirical analysis of export demand for ‘waste and scrap’

We examine the substitutability of waste and scrap exported from different countries by estimating the export demand functions of China. In particular, we focus on the export of other ferrous waste and scrap (HS code 720449) and other waste, parings and scrap of plastics (HS code 391590). It is shown that the substitutability of these wastes and scraps is weak among the exporting countries. Our empirical results imply that a uniform ban on trading hazardous waste, represented by the Basel Ban, could be an inefficient environmental policy.