Koji Domon

Access pricing and market structure

Abstract In telecommunications industries access charge problems are important issues during deregulation. In Japan and the US, deregulation also involves the issue of industrial structures as integration or divestiture of a long-distance sector. This paper analyzes access charge problems by introducing effects of the divestiture on cost functions. We show how the effects influence economic welfare under the integration and the divestiture in the Stackelberg model. The main result is that, without regulation, welfare losses, caused by an effect of double marginalization in the divestiture case, are not crucial when an entrant and a divested long-distance firm can make use of an efficient cost function. We also obtain a relationship between Ramsey access charges and the Efficient Component Pricing Rule.

A Voluntary Subsidy Scheme for the Accounting Rate System in International Telecommunications Industries

This paper proposes a new scheme complementing the current accounting rate system for international telecommunications industries. From an economic standpoint, the current accounting rate system results in high service charges as well as inefficient production. This is a source of contention between developed countries and less developed countries. Although there have been discussions concerning the disadvantages of the accounting rate system, a concrete and workable alternative has not yet been proposed. In this paper, we shall propose a method, taking into account the utilization of a subsidy from a developed country to a less developed country to reduce the accounting rate in international telecommunications, and this scheme brings a second-best solution.

Introduction: A Methodology and Its Precursors

This chapter explains the importance of considerations of IPR infringement in developing and emerging countries and the necessity of Law and Economics incorporating Industrial Economics into these analyses. Next, a three-step method of field research is explained: first, purchasing illicit goods as a customer in the marketplace; second, conducting interviews with retailers, producers, and consumers; and third, collecting samples from consumers. Main results of the following chapters are summarized, and finally, the possible criticism that the methodology is biased towards an economic perspective is discussed. Accurate legal consideration is important when addressing cases in developed countries. However, in developing countries, with little legal enforcement, addressing IPR infringement requires that we understand the economic reasoning behind phenomena causing it.

Markets of Quasi-Credence and Similar Foods

This chapter considers quasi-credence and similar foods in Southeast Asian countries. In a market of foreign foods (quasi-credence foods) where domestic consumers cannot distinguish counterfeits from originals even after eating them, domestic authorities do not have an incentive for enforcement if originals are not produced in the country, that is, if profits of an original producer do not contribute to domestic social welfare. An incentive for strict enforcement exists only if originals are produced in the country. I also consider a market of similar processed foods, where judgement about design right infringement is vague. Some companies sue, and others do not respond to the infringement. I consider this phenomenon by using a model of monopolistic competition and prove that the similarity can create positive mutual externalities and benefit all producers. This outcome parallels a form of biological mimicry (Mullerian mimicry).

Unauthorized Copying and Incentives for Musicians

This chapter considers piracy in the music industry. After identifying general factors influencing music piracy, using facts obtained by field research, I analyse reasons why P2P file-sharing was rare in Vietnam and show that piracy worked as necessary free promotion of live performance for most musicians. I also provide a theoretical analysis considering the condition of profit maximization using piracy as promotion. Furthermore, using samples collected from college students in Japan, China, Vietnam, and South Korea, I consider how music piracy is impacted by transaction costs: ISP fees, risk of apprehension, time to download files, etc. Each country has unique characteristics which can be explained by its transaction costs. I explain these characteristics by using the Cobb–Douglas utility function.

Fake Spare Parts When No Domestic Brand Names Can Be Trusted

This chapter considers fake motorcycle spare parts whose value is determined by duration and quality. A bad image about domestic products, which is often present in developing countries, causes consumers to distrust domestic brand names. That is a major reason why fake packaging was pervasive in Vietnam. I first explain the fact, obtained by field research, that repairpersons have incentives not only to use fake spare parts but also to mitigate incomplete consumer information about quality. I then analyse this phenomenon in a theoretical model, indicating inconsistent incentives concerning social welfare and consumers’ surpluses. I also consider a counterfeiting game between counterfeiters producing products of differing quality and show that a counterfeiter producing second-tier products does not always prefer no enforcement, while a counterfeiter producing lowest quality products always prefers it.

A Counterfeiting Game: A Vietnamese Case Study in the Motorcycle Industry

We show how consumers react to incomplete information on product quality and examine incentives for wholesalers and retailers to provide consumers with real quality information, taking into account the market structure for motorcycle parts in Vietnam. We consider incentives of counterfeiters to support strict enforcement and indicate that they need strictness when they produce middle-quality goods. However, in Nash equilibrium between middle and low-quality producers under no enforcement, both manufacturers produce counterfeits. This results in a possibility of cooperation between authorities and counterfeiters for strict enforcement and suggests that counterfeiters do not always prefer a situation of no enforcement. These analyses by an oligopoly model are based upon field research within the real market of Vietnam.

A Survey on Characteristics of Japanese Academic Job Market and Evaluation

Background: During the Meiji era, at the end of the 19th century, Japan introduced western systems into many fields, economically developing later than other industrially developed countries. Japan introduced a higher education system modeled on the German system, focusing not on education but on research. The historical background has shaped contemporary Japanese academia differently from that of the United States and the European Union. In addition, because of geographical and linguistic barriers in Asia, intercommunication with researchers in other developed countries has been much less than that between the United States and the European Union, leaving Japanese academia relatively isolated. Method: We survey the characteristics of the Japanese academic system in higher education, using the latest published data. Result: This article indicates a concentration of research at former imperial universities and a rigidity of movement among universities both internationally and domestically. Furthermore, small differences in salary levels have provided little incentive to perform research. However, while most universities in Japan have not introduced evaluation systems for promotion and salary that are heavily dependent on journal rankings, as in the European Union and United States, Japanese academic performance has not declined. Conclusion: This article suggests that in Japan, salary incentives, the impact factor, and so on have had little influence on academic performance. Even though cultural and historical differences between countries affect academic behaviors, we hope that this article might trigger consideration of other possible evaluation schemes for the future.

Reciprocal Privacy Invasion and Taxation on a Portal Site

This paper considers privacy invasion resulting from map services, such as Street View, on the Internet. Reciprocal privacy invasion can develop into a Prisoners’ Dilemma. A portal site remedies such a dilemma by supplying personal information. However, under excessive supply, it worsens agents’ utility. We consider two types of taxation, those on personal information and advertisements, in order to bring about a social optimum. Furthermore, we obtain a condition in order to bring about large tax revenues redistributed to privacy-encroached agents. When an elasticity of a view demand to the amount of information is greater (or less) than unit, a tax revenue from information is greater (or less) than that from advertisement. Furthermore, by using the elasticity, we show a condition of enough compensation for victims of privacy invasion through transfers by tax revenues.

Expansible Online Social Networks

This paper considers situations in which social networks expand on the web. These are sustained through content produced by individual agents. An incentive for such production is utility stemming from others’ viewings. Whether a network is expansible or not depends on marginal utilities from viewing and being viewed, while a greater marginal utility from viewing is necessary for such a network. This is proven using Nash equilibrium and a random graph in which agents are stochastically connected to each other.