Daisuke Shimizu

We investigate the flexible manufacturing system (FMS) by using the spatial price discrimination framework of Pal. The degree of flexibility when producing variants can be increased by increasing the investment or production cost and is endogenously determined. Our result is that private incentives for increasing flexibility are excessive from a social welfare perspective.

We investigate in a spatial Cournot competition setting how much product research and development (R&D) investment firms make in order to differentiate their goods. The model features a location competition in the first stage, R&D competition in the second stage, and Cournot competition in the third stage. There are two differentiation methods in the model-spatial differentiation affecting the firm costs, and differentiation in the demand function affecting the demand levels. We find that comparing to the setting with no spatial connotation, the firms tend to invest less in product R&D. We also consider welfare implications. Although the firms employ maximum differentiation in equilibrium, there are cases in which welfare can be improved if the firms are to locate closer to each other.

We investigate equilibrium locations of a spatial Cournot competition model that includes both circular city and linear city models as special cases. We find that the equilibrium location is discontinuous with respect to parameter beta (beta = 0 implies circular and beta = 1 implies linear), and multiple equilibria appear for some range of beta. The location pattern becomes exactly the same as that of the linear city for a wide range of beta, while it exactly matches that of circular city only when beta = 0. This implies the property of the linear city holds for non-measure zero case, while circular city does not.

We investigate a mixed economy where state-owned public enterprises compete against private firms. We examine sequential privatization of public enterprises, and find that under plausible assumptions one privatization increases the welfare gains of the subsequent privatizations. Thus, even if privatization does not improve welfare at the early stages, it can eventually lead to a point such that privatizations after that point are beneficial to the society and the privatization program ends up with a success.