Forthcoming papers


Furusawa, Taiji and Naoto Jinji. gTariff Revenue Competition in a Free Trade Area: The Case of Asymmetric Large Countries.h Review of Development Economics, forthcoming.


Richardson (1995) shows the striking result that tariff revenue competition between two symmetric member countries of a free trade area (FTA) results in complete elimination of external tariffs if there exists a pure-strategy Nash equilibrium at all. He also conjectures without building a model that if member countries are asymmetric in the market size, there exists a pure-strategy Nash equilibrium in which both countries set positive external tariffs. We explicitly extend his tariff competition model into the case of asymmetric FTA member countries, and confirm his conjecture. We also show that there exists a mixed-strategy Nash equilibrium in the case of symmetric countries.


Discussion Paper Version


Jinji, Naoto. gInternational Trade and Renewable Resources under Asymmetries of Resource Abundance and Resource Management.h Environmental and Resource Economics, forthcoming


This paper examines the interaction between relative resource abundance and resource management regimes in determining trade patterns and gains from trade in a two-country model with a renewable resource.  A model developed by Brander and Taylor (1997b) is extended.  It is shown that relative resource abundance determines trade patterns if resource abundance is similar in both countries and the relative demand for the resource good is moderate, or if resource abundance is sufficiently different and the relative demand is not so high.  Otherwise, a difference in resource management regimes determines trade patterns.  Even under an open-access regime, the resource-scarce country gains from trade unless resource abundance is similar and the relative demand is low.


Keywords: international trade; open access; relative resource abundance; renewable resources; resource management regime.

JEL classification: F10, Q20.

Discussion Paper Version


Toshimitsu, Tsuyoshi and Naoto Jinji. gQuality Differentiation, Welfare, and the Mode of Competition in a Vertically Differentiated Product Market: A Note.h Japanese Economics Review, forthcoming.


We analyze the implications of quality differences in a vertically differentiated product market for social welfare by employing an endogenous quality choice model. We find that in the cases of Bertrand and Cournot duopolies, the degree of quality differentiation at equilibrium in an unregulated market is larger or smaller, respectively, than that of the socially second-best optimum.  This implies that a reduction in quality difference respectively increases or decreases social welfare in the case of Bertrand or Cournot duopolies.


JEL Classification: L13, L15, D43.





Published papers


Jinji, Naoto. 2006. gInternational Trade and Terrestrial Open-access Renewable Resources in a Small Open Economy.h Canadian Journal of Economics 39(3): 790-808.


In this paper, I investigate the effects of trade liberalization and policies on deforestation by extending a small open economy model with open-access renewable resources developed by Brander and Taylor (1997a).  I endogenize the carrying capacity of the resource.  I find that unlike Brander and Taylor, trade liberalization may increase the forest stock in the resource abundant country and may decrease the forest stock in the resource scarce country.  Moreover, the policies primarily aimed at protecting forests, such as import restrictions by importing countries and forest certification for well-managed forests, may have perverse effects on the forest stock.


Keywords: terrestrial renewable resources; deforestation; carrying capacity; base resources; forest certification; import restrictions.

JEL classification: F10, Q20.



Jinji, Naoto and Tsuyoshi Toshimitsu. 2006. gOptimal Policy for Product R&D with Endogenous Quality Ordering: Asymmetric Duopoly.h Australian Economic Papers 45(2): 127-140.


We examine the optimal R&D subsidy/tax policy under a vertically differentiated duopoly.  In a significant departure from the existing work, we consider the case of asymmetric costs of product R&D where there is a small technology gap between firms.  In our analysis, the endogeneity of quality ordering is explicitly taken into account.  We demonstrate the possible anti-leapfrogging effect of R&D subsidy/tax policy.  By committing to a firm-specific subsidy schedule contingent on firms' quality choices, the government can not only correct distortions in product quality but also select the socially preferred equilibrium.  The latter role is fulfilled by preventing the technologically inferior firm from becoming a quality leader in the industry.  Both Bertrand and Cournot cases are analyzed.


Keywords: asymmetric duopoly; endogenous quality ordering; product R&D; R&D policy; vertical product differentiation.

JEL classification: L10, L52.

Discussion Paper Version


Higashida, Keisaku and Naoto Jinji. 2006. gStrategic Use of Recycled Content Standards under International Duopoly.h Journal of Environmental Economics and Management 51(2): 242-257.


We examine the strategic use of recycled content standards (RCSs) under international duopoly.  RCSs require firms supplying the domestic market to use a certain proportion of recycled materials as inputs.  We demonstrate that, when there is no trade in recycled materials, two identical countries both set strategically stricter or laxer RCSs.  However, when there is trade in recycled materials, it may be the case that one country sets a stricter RCS while the other sets a laxer RCS. When a world supply constraint on recycled materials is not binding, the main source of the asymmetric distortion in RCSs is a demand effect for recycled materials.


Keywords: recycling; recycled content standard; international trade; strategic trade policy.

JEL classification: F12; F13; F18.

Discussion Paper Version


Jinji, Naoto. 2004. gEndogenous Timing in a Vertically Differentiated Duopoly with Quantity Competition.h Hitotsubashi Journal of Economics 45: 119-127.


This paper examines the endogenous choice of timing in a vertically differentiated duopoly with fixed cost of quality improvement when firms compete in quantities in the market.  Using an extended game with observable delay, it is shown that when firms can choose the timing of quality choice, simultaneous play equilibria arise.  By contrast, when firms can choose their relative positions in the quality space before deciding the timing, the game yields sequential play equilibria in which the low quality firm moves first and the high quality firm moves second.


Keywords: endogenous timing; quality choice; quantity competition; vertical product differentiation.

JEL classification: D43, L13.



Jinji, Naoto and Tsuyoshi Toshimitsu. 2004. gMinimum Quality Standards under Asymmetric Duopoly with Endogenous Quality Ordering: A Note.h Journal of Regulatory Economics 26(2): 189-199.


In this note, we revisit minimum quality standards (MQS) under a vertically differentiated duopoly.  We generalize the model in Ronnen (1991) and Valletti (2000) by introducing asymmetry into the fixed cost of quality improvement and by explicitly taking into account the endogeneity of quality ordering.  In the generalized model, we show that the results derived by Ronnen (1991) and Valletti (2000) are largely robust.


Keywords: asymmetric duopoly, endogenous quality ordering, minimum quality standards, vertical product differentiation

JEL classification: L13, L15, L52



Jinji, Naoto. 2003. gStrategic Mandatory Labelling of Biotechnology Products in the Absence of Quality Difference.h International Trade Journal 17(4): 305-320.


This paper examines the strategic use of mandatory labelling of biotechnology products, such as genetically modified food. A foreign dominant firm produces a biotechnology product and foreign competitive firms produce a conventional one. It is shown that if other trade measures such as tariffs are also available, the government of an importing country may impose mandatory labelling even in the case where there is no quality difference between biotechnology and conventional products. A combination of a discriminatory tariff on the biotechnology product and mandatory labelling shifts rents from the foreign dominant firm to the domestic economy.


Keywords: labelling; strategic trade policy; credence goods; biotechnology; genetically modified food; process attribute.

JEL classification: F12; F13; L15; Q17.



Jinji, Naoto. 2003. gStrategic Policy for Product R&D with Symmetric Costs.h Canadian Journal of Economics 36(4): 993-1006.


This paper examines strategic policy for product R&D in an international duopoly where domestic and foreign firms are identical.  It is shown that strategic R&D policy is described by a menu of subsidy schedule contingent on firms' quality choices.  Unilateral policy enables its domestic firm to produce a high quality product, making equilibrium outcome unique.  With two active governments, in equilibrium they implement different subsidy schedules.  Two equilibrium outcomes exist, which are identical except for the identity of the countries.  Thus, both countries have an equal chance to become the high quality exporter.  Bertrand and Cournot cases are both examined.


Keywords: endogenous quality ordering, product R&D, strategic trade policy, vertical differentiation.

JEL classification: F12, F13.




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Last Updated: October 3, 2006