Strategic Behavior in Day-Ahead and Real-Time Markets for Electricity: Offer Cost or Payment Cost Minimization?

This study compares the procurement cost-minimizing and productive efficiency performance of the auction mechanism used by independent system operators (ISOs) in wholesale electricity auction markets in the U.S. with that of a proposed alternative. The current practice allocates energy contracts as if the auction featured a discriminatory final payment method when, in fact, the markets are uniform price auctions. The proposed alternative explicitly accounts for the market clearing price during the allocation phase. We find that the proposed alternative largely outperforms the current practice on the basis of procurement costs in the context of simple auction markets featuring both day-ahead and real-time auctions and that the procurement cost advantage of the alternative is complete when we simulate the effects of increased competition. We also find that a trade-off between the objectives of procurement cost minimization and productive efficiency emerges in our simple auction markets and persists in the face of increased competition.

Are Shirking and Leisure Substitutable? An Empirical Test of Efficiency Wages Based on Urban Economic Theory

Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard efficiency wage model in order to allow for behavioral substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the time available for leisure at home and therefore affects the trade-off between effort at work and risk of unemployment. This model implies an empirical relationship between expected commutes and labor market outcomes, which is tested using the Public Use Microdata sample of the 2000 U.S. Decennial Census. The empirical results suggest that efficiency wages operate primarily for blue collar workers, i.e. workers who tend to be in occupations that face higher levels of supervision. For this subset of workers, longer commutes imply higher levels of unemployment and higher wages, which are both consistent with shirking and leisure being substitutable.

Shirking, Commuting and Labor Market Outcomes

Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard efficiency wage model in order to allow for behavioral substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the time available for leisure at home and therefore affects the trade-off between effort at work and risk of unemployment. This model implies an empirical relationship between expected commutes and labor market outcomes, which is tested using the metropolitan sample of the American Housing Survey. No evidence is found to suggest a consistent impact of efficiency wages on the spatial pattern of unemployment or earnings.

Who's in Charge in the Inner City? The Conflict Between Efficiency and Equity in the Design of a Metropolitan Area

A circular metropolitan area consists of an inner city and a suburb. Households sort over the two jurisdictions based on public service levels and their costs of commuting to the metropolitan center. Using numerical simulations, we show (1) there typically exist two equilibria: one in which the poor form the majority in the inner city and the other in which the rich form the majority in the inner city; (2) there is an efficiency vs. equity trade-off as to which equilibrium is preferred; and (3) if the inner city contains only poor households, equity favors expanding the inner city to include rich households.

Comparison of compliance and immune response of drug users on the standard and accelerated hepatitis B vaccine schedules - Houston, Texas

Despite the availability of hepatitis B vaccine for over two decades, drug users and other high-risk adult populations have experienced low vaccine coverage. Poor compliance has limited efforts to reduce transmission of hepatitis B infection in this population. Evidence suggests that immunological response in drug users is impaired compared to the general population, both in terms of lower seroprotection rates and antibodies levels.^ The current study investigated the effectiveness of the multi-dose hepatitis B vaccine and compared the effect of the standard and accelerated vaccine schedules in a not-in-treatment, drug-using adult population in the city of Houston, USA.^ A population of drug-users from two communities in Houston, susceptible to hepatitis B, was sampled by outreach workers and referral methodology. Subjects were randomized either to the standard hepatitis vaccine schedule (0, 1-, 6-month) or to an accelerated schedule (0, 1-, 2-month). Antibody levels were detected through laboratory analyses at various time-points. The participants were followed for two years and seroconversion rates were calculated to determine immune response.^ A four percent difference in the overall compliance rate was observed between the standard (73%) and accelerated schedules (77%). Logistic regression analyses showed that drug users living on the streets were twice as likely to not complete all three vaccine doses (p=0.028), and current speedball use was also associated with non-completion (p=0.002). Completion of all three vaccinations in the multivariate analysis was also correlated with older age. Drug users on the accelerated schedule were 26% more likely to achieve completion, although this factor was marginally significant (p=0.085).^ Cumulative adequate protective response was gained by 65% of the HBV susceptible subgroup by 12-months and was identical for both the standard and accelerated schedules. Excess protective response (>=100 mIU/mL) occurred with greater frequency at the later period for the standard schedule (36% at 12-months compared to 14% at six months), while the greater proportion of excess protective response for the accelerated schedule occurred earlier (34% at 6 months compared to 18% at 12-months). Seroconversion at the adequate protective response level of 10 mIU/mL was reached by the accelerated schedule group at a quicker rate (62% vs. 49%), and with a higher mean titer (104.8 vs. 64.3 mIU/mL), when measured at six months. Multivariate analyses indicated a 63% increased risk of non-response for older age and confirmed the existence of an accelerating decline in immune response to vaccination manifesting after 40 years (p=0.001). Injecting more than daily was also highly associated with the risk of non-response (p=0.016).^ The substantial increase in the seroprotection rate at six months may be worth the trade-off against the faster antibody titer decrease and is recommended for enhancing compliance and seroconversion. Utilization of the accelerated schedule with the primary objective of increasing compliance and seroconversion rates during the six months after the first dose may confer early protective immunity and reduce the HBV vulnerability of drug users who continue, or have recently initiated, increased high risk drug use and sexual behaviors.^

ANTI-TUMOR EFFECTS OF THE NOTCH PATHWAY IN GASTROINTESTINAL STROMAL TUMORS

Gastrointestinal Stromal Tumors (GIST) are sarcomas driven by gain-of-function mutations of KIT or PDGFRA. Although, the introduction of tyrosine kinase inhibitors has dramatically changed the history of this disease, evidences emerge that inhibition of KIT or PDGFRA are not sufficient to cure patients. The developmental pathway Notch has a critical role in the cell fate, regulating cell proliferation and differentiation. Dysregulation of Notch pathway has been implicated in a wide variety of cancers functioning as a tumor promoter or a tumor suppressor in a cell context dependent manner. Given that Notch activation deregulates the morphogenesis of mesenchymal cells in the GI track, that Notch acts as a tumor suppressor in neuroendocrine tumors, and finally that the cell of origin of GIST are the Interstitial Cell of Cajal that arise from a mesenchymal origin with some neuroendocrine features, we hypothesized that Notch pathway signaling may play a role in growth, survival and differentiation of GIST cells. To test this hypothesis, we genetically and pharmacologically manipulated the Notch pathway in human GIST cells. In this study, we demonstrated that constitutively active intracellular domain of Notch1 (ICN-1) expression potently induced growth arrest and downregulated KIT expression. We have performed a retrospective analysis of 15 primary GIST patients and found that high mRNA level of Hes1, a major target gene of Notch pathway, correlated with a significantly longer relapse-free survival. Therefore, we have established that treatment with the FDA approved histone deacetylase inhibitor SAHA (Vorinostat) caused dose-dependent upregulation of Notch1 expression and a parallel decrease in viability in these cells. Retroviral silencing of downstream targets of Notch with dominant negative Hes-1 as well as pharmacological inhibition of Notch pathway with a γ-secretase inhibitor partially rescued GIST cells from SAHA treatment. Taken together these results identify anti-tumor effect of Notch1 and a negative cross-talk between Notch1 and KIT pathways in GIST. Consequently, we propose that activation of this pathway with HDAC inhibitors may be a potential therapeutic strategy for GIST patients.

Valoración económica de los efectos de la presión antrópica sobre el piedemonte mendocino : una aplicación de los experimentos de elección discreta

En general, el análisis socioeconómico de los sistemas naturales no se contempla en los dominios de la ciencia natural. En este trabajo, sin embargo, se estima el cambio en el bienestar social por los efectos de la presión antrópica sobre el piedemonte mendocino vía la menor provisión de servicios ambientales. Para ello, se utiliza el método de los experimentos de elección discreta para inferir el valor social de tres servicios ambientales generados en las cuencas ubicadas al oeste del Gran Mendoza (riesgo aluvional, cobertura vegetal y recreación) y los costos de programas diseñados para mitigar la intensidad de dichos efectos. Un incremento del riesgo aluvional es el efecto de origen antrópico sobre el piedemonte mendocino que más preocupa a la población, seguido de una disminución de la cobertura vegetal y de la recreación. Se estimó que un incremento del riesgo aluvional en 1% equivale en pérdida de bienestar individual a un gasto, en promedio, de 24,13 pesos, en moneda de 2013, al año, cifra que es equivalente en términos de bienestar a una disminución de 6% de cobertura vegetal. Esta información puede ayudar a los hacedores de políticas, gestores de territorio y ecologistas a tener en cuenta las preferencias sociales en el diseño de sus programas y actividades.

Petrology and geochemistry of basalts from the Vavilov Basin

During ODP Leg 107, two holes were drilled in the basement of Vavilov Basin, a central oceanic area of the Tyrrhenian sea. Hole 655B is located near the Gortani ridge in off-axis position at the western rim of the basin; Hole 651A is located on a basement swell at the axis of the basin. This paper deals with mineral chemistry, major and trace element geochemistry, and petrogenesis of the basalts recovered in the two holes. The mineralogy of the basalts is broadly homogeneous, but all of them have suffered important seawater alteration. Their major-element compositions are similar to both normal-mid-ocean-ridge-basalts (N-MORB) and back-arc-basalts (BAB) except for Na2O contents (BAB-like), and K2O which is somewhat enriched in upper unit of Hole 651 A. Their affinity with N-MORB and BAB is confirmed by using immobile trace elements such as Zr, Y, and Nb. However, basalts from the two sites present contrasting geochemical characteristics on spidergrams using incompatible elements. Hole 655B basalts are homogeneous enriched tholeiites, similar to those from DSDP Hole 373 (located on the opposite side of the basin near the eastern rim), and show affinities with enriched MORB (E-MORB). At Hole 651 A, the two basalt units are chemically distinct. One sample recovered in lower unit is rather similar to those from Hole 655B, but basalts from upper unit display calc-alkaline characteristic evidenced by the increase of light-ion-lithophile-element (LILE)/high-field-strength-element (HFSE) ratio, and appearance of a negative Nb-anomaly, making them comparable with orogenic lavas from the adjacent Eolian arc. The observed chemical compositions of the basalts are consistent with a derivation of the magmas from a N-MORB type source progressively contaminated by LILE-enriched fluids released from dehydration of the bordering subducted plate. Implications for evolution of the Tyrrhenian basin are tentatively proposed taking into consideration geochemical and chronological relationships between basalts from Leg 107 Holes 655B and 651 A, together with data from Leg 42 Site 373 and Vavilov Seamount. These data illustrate back-arc spreading in ensialic basin closely associated with the maturation of the adjacent subduction, followed by the growth of late off-axis central volcano, whereas the active subduction retreats southeastward.

Seawater carbonate chemistry and biological processes of bivalve shellfish Mercenaria mercenaria and Argopecten irradians during experiments, 2011

The combustion of fossil fuels has enriched levels of CO2 in the world's oceans and decreased ocean pH. Although the continuation of these processes may alter the growth, survival, and diversity of marine organisms that synthesize CaCO3shells, the effects of ocean acidification since the dawn of the industrial revolution are not clear. Here we present experiments that examined the effects of the ocean's past, present, and future (21st and 22nd centuries) CO2concentrations on the growth, survival, and condition of larvae of two species of commercially and ecologically valuable bivalve shellfish (Mercenaria mercenariaand Argopecten irradians). Larvae grown under near preindustrial CO2concentrations (250 ppm) displayed significantly faster growth and metamorphosis as well as higher survival and lipid accumulation rates compared with individuals reared under modern day CO2 levels. Bivalves grown under near preindustrial CO2 levels displayed thicker, more robust shells than individuals grown at present CO2 concentrations, whereas bivalves exposed to CO2 levels expected later this century had shells that were malformed and eroded. These results suggest that the ocean acidification that has occurred during the past two centuries may be inhibiting the development and survival of larval shellfish and contributing to global declines of some bivalve populations.

Adaptive variability to low-pH river discharges in Acartia tonsa and stress responses to high PCO2 conditions

Environmental transitions leading to spatial physical-chemical gradients are of ecological and evolutionary interest because they are able to induce variations in phenotypic plasticity. Thus, the adaptive variability to low-pH river discharges may drive divergent stress responses [ingestion rates (IR) and expression of stress-related genes such as Heat shock protein 70 (Hsp70) and Ferritin] in the neritic copepod Acartia tonsa facing changes in the marine chemistry associated to ocean acidification (OA). These responses were tested in copepod populations inhabiting two environments with contrasting carbonate system parameters (an estuarine versus coastal area) in the Southern Pacific Ocean, and assessing an in situ and 96-h experimental incubation under conditions of high pressure of CO2 (PCO2 1200 ppm). Adaptive variability was a determining factor in driving variability of copepods' responses. Thus, the food-rich but colder and corrosive estuary induced a traits trade-off expressed as depressed IR under in situ conditions. However, this experience allowed these copepods to tolerate further exposure to high PCO2 levels better, as their IRs were on average 43% higher than those of the coastal individuals. Indeed, expression of both the Hsp70 and Ferritin genes in coastal copepods was significantly higher after acclimation to high PCO2 conditions. Along with other recent evidence, our findings confirm that adaptation to local fluctuations in seawater pH seems to play a significant role in the response of planktonic populations to OA-associated conditions. Facing the environmental threat represented by the inter-play between multiple drivers of climate change, this biological feature should be examined in detail as a potential tool for risk mitigation policies in coastal management arrangements.

The Long-Run Phillips Curve: A Structural VAR Investigation

Both cointegration methods, and non-cointegrated structural VARs identified based on either long-run restrictions, or a combination of long-run and sign restrictions, are used in order to explore the long-run trade-off between inflation and the unemployment rate in the post-WWII U.S., U.K., Euro area, Canada, and Australia. Overall, neither approach produces clear evidence of a non-vertical trade-off. The extent of uncertainty surrounding the estimates is however substantial, thus implying that a researcher holding alternative priors about what a reasonable slope of the long-run trade-off might be will likely not see her views falsified

The European Hare (Lepus europaeus): A Picky Herbivore Searching for Plant Parts Rich in Fat

European hares of both sexes rely on fat reserves, particularly during the reproduc-tive season. Therefore, hares should select dietary plants rich in fat and energy. However, hares also require essential polyunsaturated fatty acids (PUFA) such as linoleic acid (LA) and alpha-linolenic acid (ALA) to reproduce and survive. Although hares are able to absorb PUFA selectively in their gastrointestinal tract, it is unknown whether this mechanism is sufficient to guarantee PUFA supply. Thus, diet selection may involve a trade-off between a preference for energy versus a preference for crucial nutrients, namely PUFA. We compared plant and nutrient availability and use by hares in an arable landscape in Austria over three years. We found that European hares selected their diet for high energy content (crude fat and crude protein), and avoided crude fibre. There was no evidence of a preference for plants rich in LA and ALA. We conclude that fat is the limiting resource for this herbivorous mammal, whereas levels of LA and ALA in forage are sufficiently high to meet daily requirements, especially since their uptake is enhanced by physiological mechanisms. Animals selected several plant taxa all year round, and preferences did not simply correlate with crude fat content. Hence, European hares might not only select for plant taxa rich in fat, but also for high-fat parts of preferred plant taxa. As hares preferred weeds/grasses and various crop types while avoiding cereals, we suggest that promoting heterogeneous habitats with high crop diversity and set-asides may help stop the decline of European hares throughout Europe.

Parental effects improve escape performance of juvenile reef fish in a high-CO2 world

Rising CO2 levels in the oceans are predicted to have serious consequences for many marine taxa. Recent studies suggest that non-genetic parental effects may reduce the impact of high CO2 on the growth, survival and routine metabolic rate of marine fishes, but whether the parental environment mitigates behavioural and sensory impairment associated with high CO2 remains unknown. Here, we tested the acute effects of elevated CO2 on the escape responses of juvenile fish and whether such effects were altered by exposure of parents to increased CO2 (transgenerational acclimation). Elevated CO2 negatively affected the reactivity and locomotor performance of juvenile fish, but parental exposure to high CO2 reduced the effects in some traits, indicating the potential for acclimation of behavioural impairment across generations. However, acclimation was not complete in some traits, and absent in others, suggesting that transgenerational acclimation does not completely compensate the effects of high CO2 on escape responses.

Seawater carbonate chemistry and physiological response of the Mediterranean crustose coralline alga Lithophyllum cabiochae to elevated pCO2 and temperature

The response of respiration, photosynthesis, and calcification to elevated pCO2 and temperature was investigated in isolation and in combination in the Mediterranean crustose coralline alga Lithophyllum cabiochae. Algae were maintained in aquaria during 1 year at near-ambient conditions of irradiance, at ambient or elevated temperature (+3 °C), and at ambient (ca. 400 µatm) or elevated pCO2 (ca. 700 µatm). Respiration, photosynthesis, and net calcification showed a strong seasonal pattern following the seasonal variations of temperature and irradiance, with higher rates in summer than in winter. Respiration was unaffected by pCO2 but showed a general trend of increase at elevated temperature at all seasons, except in summer under elevated pCO2. Conversely, photosynthesis was strongly affected by pCO2 with a decline under elevated pCO2 in summer, autumn, and winter. In particular, photosynthetic efficiency was reduced under elevated pCO2. Net calcification showed different responses depending on the season. In summer, net calcification increased with rising temperature under ambient pCO2 but decreased with rising temperature under elevated pCO2. Surprisingly, the highest rates in summer were found under elevated pCO2 and ambient temperature. In autumn, winter, and spring, net calcification exhibited a positive or no response at elevated temperature but was unaffected by pCO2. The rate of calcification of L. cabiochae was thus maintained or even enhanced under increased pCO2. However, there is likely a trade-off with other physiological processes. For example, photosynthesis declines in response to increased pCO2 under ambient irradiance. The present study reports only on the physiological response of healthy specimens to ocean warming and acidification, however, these environmental changes may affect the vulnerability of coralline algae to other stresses such as pathogens and necroses that can cause major dissolution, which would have critical consequence for the sustainability of coralligenous habitats and the budgets of carbon and calcium carbonate in coastal Mediterranean ecosystems.

Chapter 8 Location Choice of Japanese Multinationals: Country Characteristics or Region Characteristics?

In the present global era in which firms choose the location of their plants beyond national borders, location characteristics are important for attracting multinational enterprises (MNEs). The better access to countries with large market is clearly attractive for MNEs. For example, special treatments on tariffs such as the Generalized System of Preferences (GSP) are beneficial for MNEs whose home country does not have such treatments. Not only such country characteristics but also region characteristics (i.e. province-level or city-level ones) matter, particularly in the case that location characteristics differ widely between a nation's regions. The existence of industrial concentration, that is, agglomeration, is a typical regional characteristic. It is with consideration of these country-level and region-level characteristics that MNEs decide their location abroad. A large number of academic studies have investigated in what kinds of countries MNEs locate, i.e. location choice analysis. Employing the usual new economic geography model (i.e. constant elasticity of substitution (CES) utility function, Dixit-Stiglitz monopolistic competition, and ice-berg trade costs), the literature derives the profit function, of which coefficients are estimated using maximum likelihood procedures. Recent studies are as follows: Head, Rise, and Swenson (1999) for Japanese MNEs in the US; Belderbos and Carree (2002) for Japanese MNEs in China; Head and Mayer (2004) for Japanese MNEs in Europe; Disdier and Mayer (2004) for French MNEs in Europe; Castellani and Zanfei (2004) for large MNEs worldwide; Mayer, Mejean, and Nefussi (2007) for French MNEs worldwide; Crozet, Mayer, and Mucchielli (2004) for MNEs in France; and Basile, Castellani, and Zanfei (2008) for MNEs in Europe. At the present time, three main topics can be found in this literature. The first introduces various location elements as independent variables. The above-mentioned new economic geography model usually yields the profit function, which is a function of market size, productive factor prices, price of intermediate goods, and trade costs. As a proxy for the price of intermediate goods, the measure of agglomeration is often used, particularly the number of manufacturing firms. Some studies employ more disaggregated numbers of manufacturing firms, such as the number of manufacturing firms with the same nationality as the firms choosing the location (e.g., Head et al., 1999; Crozet et al., 2004) or the number of firms belonging to the same firm group (e.g., Belderbos and Carree, 2002). As part of trade costs, some investment climate measures have been examined: free trade zones in the US (Head et al., 1999), special economic zones and opening coastal cities in China (Belderbos and Carree, 2002), and Objective 1 structural funds and cohesion funds in Europe (Basile et al., 2008). Second, the validity of proxy variables for location elements is further examined. Head and Mayer (2004) examine the validity of market potential on location choice. They propose the use of two measures: the Harris market potential index (Harris, 1954) and the Krugman-type index used in Redding and Venables (2004). The Harris-type index is simply the sum of distance-weighted real GDP. They employ the Krugman-type market potential index, which is directly derived from the new economic geography model, as it takes into account the extent of competition (i.e. price index) and is constructed using estimators of importing country dummy variables in the well-known gravity equation, as in Redding and Venables (2004). They find that "theory does not pay", in the sense that the Harris market potential outperforms Krugman's market potential in both the magnitude of its coefficient and the fit of the model to be estimated. The third topic explores the substitution of location by examining inclusive values in the nested-logit model. For example, using firm-level data on French investments both in France and abroad over the 1992-2002 period, Mayer et al. (2007) investigate the determinants of location choice and assess empirically whether the domestic economy has been losing attractiveness over the recent period or not. The estimated coefficient for inclusive value is strongly significant and near unity, indicating that the national economy is not different from the rest of the world in terms of substitution patterns. Similarly, Disdier and Mayer (2004) investigate whether French MNEs consider Western and Eastern Europe as two distinct groups of potential host countries by examining the coefficient for the inclusive value in nested-logit estimation. They confirm the relevance of an East-West structure in the country location decision and furthermore show that this relevance decreases over time. The purpose of this paper is to investigate the location choice of Japanese MNEs in Thailand, Cambodia, Laos, Myanmar, and Vietnam, and is closely related to the third topic mentioned above. By examining region-level location choice with the nested-logit model, I investigate the relative importance of not only country characteristics but also region characteristics. Such investigation is invaluable particularly in the case of location choice in those five countries: industrialization remains immature in those countries which have not yet succeeded in attracting enough MNEs, and as a result, it is expected that there are not yet crucial regional variations for MNEs within such a nation, meaning the country characteristics are still relatively important to attract MNEs. To illustrate, in the case of Cambodia and Laos, one of the crucial elements for Japanese MNEs would be that LDC preferential tariff schemes are available for exports from Cambodia and Laos. On the other hand, in the case of Thailand and Vietnam, which have accepted a relatively large number of MNEs and thus raised the extent of regional inequality, regional characteristics such as the existence of agglomeration would become important elements in location choice. Our sample countries seem, therefore, to offer rich variations for analyzing the relative importance between country characteristics and region characteristics. Our empirical strategy has a further advantage. As in the third topic in the location choice literature, the use of the nested-logit model enables us to examine substitution patterns between country-based and region-based location decisions by MNEs in the concerned countries. For example, it is possible to investigate empirically whether Japanese multinational firms consider Thailand/Vietnam and the other three countries as two distinct groups of potential host countries, by examining the inclusive value parameters in nested-logit estimation. In particular, our sample countries all experienced dramatic changes in, for example, economic growth or trade costs reduction during the sample period. Thus, we will find the dramatic dynamics of such substitution patterns. Our rigorous analysis of the relative importance between country characteristics and region characteristics is invaluable from the viewpoint of policy implications. First, while the former characteristics should be improved mainly by central government in each country, there is sometimes room for the improvement of the latter characteristics by even local governments or smaller institutions such as private agencies. Consequently, it becomes important for these smaller institutions to know just how crucial the improvement of region characteristics is for attracting foreign companies. Second, as economies grow, country characteristics become similar among countries. For example, the LCD preferential tariff schemes are available only when a country is less developed. Therefore, it is important particularly for the least developed countries to know what kinds of regional characteristics become important following economic growth; in other words, after their country characteristics become similar to those of the more developed countries. I also incorporate one important characteristic of MNEs, namely, productivity. The well-known Helpman-Melitz-Yeaple model indicates that only firms with higher productivity can afford overseas entry (Helpman et al., 2004). Beyond this argument, there may be some differences in MNEs' productivity among our sample countries and regions. Such differences are important from the viewpoint of "spillover effects" from MNEs, which are one of the most important results for host countries in accepting their entry. The spillover effects are that the presence of inward foreign direct investment (FDI) aises domestic firms' productivity through various channels such as imitation. Such positive effects might be larger in areas with more productive MNEs. Therefore, it becomes important for host countries to know how much productive firms are likely to invest in them. The rest of this paper is organized as follows. Section 2 takes a brief look at the worldwide distribution of Japanese overseas affiliates. Section 3 provides an empirical model to examine their location choice, and lastly, we discuss future works to estimate our model.