2014 Fiscal Year Annual Research Report
Novel approaches to analysis of welfare impact of industrial policies
| Project/Area Number |
26705003
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| Research Institution | The University of Tokyo |
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Principal Investigator |
ファビンガー ミハル 東京大学, 経済学研究科(研究院), 講師 (00715998)
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| Project Period (FY) |
2014-04-01 – 2018-03-31
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| Keywords | 租税負担 / 為替レート パススルー / ミクロ経済学 |
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| Outline of Annual Research Achievements |
The purpose of this project is to explore, in collaboration with Glen Weyl of the University of Chicago, the implications of realistic properties of demand and supply curves that have not been previously studied due to a lack of empirical data. As larger and more detailed datasets are becoming available due to falling costs of information technology, it becomes crucial to understand the predictions of economic models that incorporate the shapes of demand and supply curves consistent with new empirical findings. Our research agenda involves (1) a novel, flexible approach to analyzing economic equilibria involving generic demand curves and cost curves, (2) a very general investigation of the social impact of price discrimination by firms, and (3) generalization of our approach to dynamic settings.
Point (1) above was successfully implemented by completing the paper A Tractable Approach to Pass-Through Patterns. We show how to use Laplace transform to solve economic models and illustrate this approach in the case of models of supply chains, wage bargaining, and standard models of international trade.
To date, the paper has received more than 35 Google Scholar citations, including ones by Harvard Professors Michael Kremer and Marc Melitz. The paper was presented at research institutions including Berkeley, Oxford, and Stanford. During a presentation at the University of Tokyo, we received very helpful advice from Nobel Laureate James Heckman, which allowed us to strengthen the mathematical foundations of our paper and which was also useful for implementing point (2) above.
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| Current Status of Research Progress |
Current Status of Research Progress
1: Research has progressed more than it was originally planned.
Reason
Besides implementing point (1) above, we made progress also on point (2), motivated by advice from James Heckman. We found how third-degree price discrimination may be analyzed using Laplace transform, and we identified the role of "complete monotonicity" in determining whether third-degree price discrimination is socially beneficial or not.
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| Strategy for Future Research Activity |
I plan to present the results of our paper "A Tractable Approach to Pass-Through" at various conferences, such as those of the Society for Economic Dynamics and the Econometric Society.
I will meet with Glen Weyl in Boston to continue working together on this project. In particular, we plan to prove theorems that characterize when third-degree price discrimination is beneficial from the social perspective and when it is not.
Also, with the help of research assistants, we will develop various applications of our broader agenda to various settings in international trade, international finance, and industrial organization.
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| Causes of Carryover |
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| Expenditure Plan for Carryover Budget |
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