Heterogeneity on the technical efficiency in Japanese airports

This paper evaluates the production activities of Japanese airports by using a finite mixture model that allows controlling for unobserved heterogeneity. In doing so, a stochastic frontier latent class model, which allows the existence of different technologies, is adopted to estimate production frontiers. This procedure not only enables the identification of different groups of Japanese airports but also permits the analysis of their production efficiency. The main result is that there are two groups of Japanese airports, both following completely different "technologies" to obtain passengers and cargo, suggesting that business strategies need to be adapted to the characteristics of the airports. Some managerial implications are developed.

Testing the international linkage in the platinum-group metal futures markets

This study tests whether an international market exists in the platinum-group metal (PGM) futures markets. For this purpose, we tested the law of one price (LOP) and the causality between the U.S. and Japanese platinum and palladium futures markets. We also performed the test when structural breaks are considered. Long-run price relationships were found in both platinum and palladium markets but the LOP only sustained in the palladium market. The causality test revealed that it is the U.S. market that leads the price to transmit information between the U.S. and Japanese markets. Structural breaks had large impacts on the test results, suggesting that incorporating breaks is important when investigating the international price linkage in the PGM futures markets.

Non-separability and substitutability among water pollutants : evidence from India

The design and implementation of environmental policy often involve more than one pollutant, and must consider pollution as a byproduct of the production of marketable output. In this paper, we test the implicit assumption in the empirical literature that (1) production of marketable output, pollution and abatement are separable, and (2) different pollutants can be abated separately. Using unique plant-level data in India, we reject the null hypotheses of separability between marketable output and pollutants, and between different pollutants. Firms must incur abatement costs for reducing pollution levels. In addition, complement and substitute relationships between water pollutants are demonstrated with statistical significance.

Price linkages in the copper futures, primary, and scrap markets

This study investigates how markets for different levels of copper purity are interrelated by testing the long-run price linkage and causalities among the copper futures, primary, copper scrap, and brass scrap markets. It is expected that copper markets that deal with high purity levels, such as the futures, primary, and copper scrap markets, have a long-run relationship. However, brass scrap markets where copper with a lower purity is traded may not have a price linkage with other copper markets. The results reveal that a long-run relationship holds between the futures, primary, and copper scrap markets but the brass scrap market does not have a long-run relationship with the other markets. From the short-run and long-run causality tests, we determine that the futures market plays an important role in transmitting price information to other copper markets while such information flow is not found for the brass scrap market.

Catch limits, capacity utilization and cost reduction in Japanese fishery management

Japan's fishery harvest peaked in the late 1980s. To limit the race for fish, each fisherman could be provided with specific catch limits in the form of individual transferable quotas (ITQs). The market for ITQs would also help remove the most inefficient fishers. In this article we estimate the potential cost reduction associated with catch limits, and find that about 300 billion yen or about 3 billion dollars could be saved through the allocation and trading of individual-specific catch shares.

The pollution release and transfer register system in the U.S. and Japan : an analysis of productivity

This study analyzes Total Factor Productivity (TFP), which includes all categories of productivity. Our measure investigates productivity in the context of the provision and dissemination of environmental information policies. We investigated data on the emission of toxic chemical substances for the U.S. and Japanese manufacturing firms, including 386 firms for the period 1999-2007 and 466 firms for the period 2001-2008. The results show that productivity improved in all nine industrial sectors and that pollution levels were high in the U.S. and Japan from 2001 to 2007. In particular, the electronics industry improved rapidly after 2002 in both countries, which may be attributed to the enforcement of RoHS and the REACH directive in Europe. As a result of these stringent policies on toxic chemical emissions, the U.S. and Japanese firms, many of which export to the European market, have strong incentives to reduce their toxic chemical emissions.

Modal choice between air and rail : a social efficiency benchmarking analysis that considers CO2 emissions

The problem of modal choice between rail and air arises as public awareness of carbon dioxide (CO2) emissions by the transportation sector rises. In this paper, we answer this question quantitatively by performing an efficiency benchmarking analysis that takes into account life-cycle CO2 emission due to transport service provision. The paper employs nonparametric efficiency estimation methods, namely a slacks-based inefficiency measure, as well as a more conventional directional distance function approach. We apply them to a panel data set for three major railway companies and the aviation sector in Japan for the period from 1999 to 2007. Results shows that, contrary to the common argument, air transport can still be more socially efficient than rail transport, even when the environmental load due to CO2 emission is incorporated. This is due to the aviation sector's extremely low user cost, measured in terms of in-vehicle time. In other words, aviation is a necessary transportation mode for those with a very high willingness to pay for their time.

The impacts of exchange rate volatility on vegetable trade flows

Trade flows of commodities are generally affected by the principles of comparative advantage in a free trade. However, trade flows might be enhanced or distorted not only by various government interventions, but also by exchange rate fluctuations among others. This study applies a commodity-specific gravity model to selected vegetable trade flows among Organization for Economic Co-operation and Development (OECD) countries to determine the effects of exchange rate uncertainty on the trade flows. Using the data from 1996 to 2002, the results show that, while the exchange rate uncertainty significantly reduces trade in the majority of commodity flows, there is evidence that both short- and long-term volatility have positive effect on trade flows of specific commodities. This study also tests the regional preferential trade agreements such as the North American Free Trade Agreement (NAFTA), the Asia-Pacific Economic Cooperation (APEC) and the EU, and their different effects on commodities.

Cost efficiency of Japanese steam power generation companies : a Bayesian comparison of random and fixed frontier models

This study analyses and compares the cost efficiency of Japanese steam power generation companies using the fixed and random Bayesian frontier models. We show that it is essential to account for heterogeneity in modelling the performance of energy companies. Results from the model estimation also indicate that restricting CO2 emissions can lead to a decrease in total cost. The study finally discusses the efficiency variations between the energy companies under analysis, and elaborates on the managerial and policy implications of the results.

License scheme : an optimal waste management policy under asymmetric information

A system requiring a waste management license from an enforcement agency has been introduced in many countries. A license system is usually coupled with fines, a manifest, and a disposal tax. However, these policy devices have not been integrated into an optimal policy. In this paper we derive an optimal waste management policy by using those policy devices. Waste management policies are met with three difficult problems: asymmetric information, the heterogeneity of waste management firms, and non-compliance by waste management firms and waste disposers. The optimal policy in this paper overcomes all three problems.

Does the housing market respond to information disclosure? : Effects of toxicity indices in Japan

The policy instruments that provide information on a firm's or facility's environmental performance, such as the U.S. Toxic Release Inventory (TRI) and the Pollutant Release and Transfer Register system (PRTRs) used in some European countries and Japan, play an important role in encouraging firms or facilities to improve their environmental performance, if investors, consumers and residents recognize their environmental performance. This study uses a hedonic approach to explore how the Japanese rental housing market responds to carcinogenic risk arising from releases and transfers of chemical substances produced and used at close facilities. We found that residents do not perceive carcinogenic risk generated more than 1.0 km away from their residence and that they seem to recognize the increased carcinogenic risk at distances from 0.5 km to 1.0 km away; a 1% increase in carcinogenic risk reduces the average rent by 0.0007%. The distance at which residents perceive the risk arising from such facilities is less than in previous studies. This suggests that the risk perception recognized in previous studies may capture the other externalities in addition to the chemical risk because the risk is measured by the distance.

Does energy substitution affect carbon dioxide emissions : income relationship?

Considerable discussion has taken place during the last decade regarding the role of economic growth in determining environmental quality. Using data from 30 OECD countries for the period 1960-2003 and the nonparametric method of generalized additive models, which enables us to use flexible functional forms, this paper examines the environmental Kuznets curve hypothesis for carbon dioxide (CO2). We find that the reduction of coal share in energy use has a significant effect on CO2. Our results imply that economic growth is not sufficient to decrease CO2 emissions.

Productivity measures and effects from subsidies and trade : an empirical analysis for Japan's forestry

Several techniques have been proposed in the literature to measure productivity. While allowing for inefficiency of the production unit, we provide a methodological comparison of alternative approaches to measure total factor productivity. This article evaluates the effects of unintended policy outcomes such as government subsidies and foreign trade. Empirically, we analyse the forest productivity of timber in Japan by using panel data on 46 regions. The results suggest substantial variation in productivity between these two techniques although average trends are similar. We find that subsidies impede competition since the government is ready to rescue a loss-making firm with subsidies rather than allow it to close. In contrast, trade is shown to have positive effects on productivity.

Productivity analysis with CO2 emissions in Japan

This article measures Japanese prefectures' productivity from 1991 to 2002, taking CO2 emissions into consideration, and examines the factors that impact on productivity. We use the data envelopment analysis and measure the Luenberger productivity indicator, incorporating CO2 emissions in the analysis. Our results show that productivity was decreasing during the period of investigation. According to the results of the generalized method of moment estimation, the operations rate, the share of the energy intensive industries and social capital significantly impact on productivity.

Technical efficiency, regulation and heterogeneity in Japanese airports

In this paper, the random stochastic frontier model is used to estimate the technical efficiency of Japanese airports, with regulation and heterogeneity included in the variables. The airports are ranked according to their productivity for the period 1987-2005 and homogeneous and heterogeneous variables in the cost function are disentangled. Policy implications are derived.