The optimal public good provision rule under optimal nonlinear income taxation is analyzed. In this case Pigou's conjecture-the level of a public good should be reduced than the first best level when it is financed by distortionary taxes-is justified under weak conditions. Using the decomposition method in Hatta, et. al. (1988), the following proposition is also shown. The optimal public good provision level should be lowered, if (a) the average marginal tax rate is high, (b) the marginal tax rate and the willingness to pay for the public good have a positive covariance, (c) the public good is more complementary with leisure and more of a luxury good than the commodity.

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In a multiple output, multiple input setting, five measures of returns to scale are currently available in the literature. These measures have been useful empirical tools, but there remain some limitations regarding data availability and the choice of behavioral assumptions. To cope with these limitations, we will introduce three new measures of returns to scale and thus will close a gap in the literature. Then, we show that our three measures are theoretically equivalent to the existing five measures. Thus, the eight measures, with their corresponding data requirements and behavioral assumptions, are also reported here for the empirical purpose of gaining greater flexibility in the choice of behavioral goals and data requirements. In this way, we unify the results in the literature and our present study and, in addition, summarize the relationship among the eight measures diagrammatically.

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This paper extends existing inventory literature by introducing current and future quantity constraints into a model of inventory holding behavior. It provides a framework for the analysis of the impact of future quantity expectations on current decisions, a concept that is used in the temporary equilibrium with quantity rationing literature but lacks a theoretical rationale. And it also shows that the more optimistic the firm is about future sales the more labor it will hire and therefore the more output it will produce. In addition, it shows that the extrinsic uncertainty of sales rationing induces the firm to hold less inventories.

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The purpose of this paper is primarily to assess the policy effect of TIP (Tax-based Incomes Policy) both on the real wage rate and the rate of unemployment. Originally it was stressed that TIP could curb the inflationary wage bargaining process between labour and management. In the early 1980's, however, the major target which TIP pursued was to reduce the rate of unemployment rather than the rate of inflation. In the neoclassical context, TIP can reduce the level of NAIRU. However, as far as the Keynesian viewpoint is concerned, we can suggest the possibility that TIP does not succeed in reducing the rate of unemployment. In this case, we would still need to combine TIP with a traditional demand management policy.

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In an economy with incomplete markets, it is hard to define the objective each firm possesses because it is difficult to evaluate the state contingent net outputs of a firm as current values and aggregate them as the net value of the firm. In this paper, extending Radner's (1972) model of an exchange economy and viewing the relationship between firms and shareholders as noncooperative, we define an appropriate equilibrium in which each firm has a rational perception of the net value of the firm and maximizes this perceived net value. Then we analyze a characterization of the efficiency of equilibria introducing a new notion of efficiency.

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An equilibrium existence theorem for the economy with infinitely many consumers and commodities is proved in a general structure of the direct system of economies. The method of proof is new and direct in the sense that the fixed point argument is applied directly to the inverse limit of price spaces without using the truncation method.

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In this paper, the dynamic factor demand system that is derived from a firm's dynamic optimization behavior in the presence of adjustment costs is estimated for the Japanese iron and steel industry. The main estimation results we obtain are as follows;
(1) The data indicate that adjustment costs for labor are much less important than those for capital.
(2) We find that the demands for materials, energy and labor have become more responsive to changes in their own prices through the first and second oil crises, while the demand for capital has become less responsive to changes in each price.
(3) It is found that capital and energy are substitutes in the long run.

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