The Central Research Institute of Electric Power Industry (CRIEPI) has developed a multiregional econometric model covering the nine regions of Japan to analyze the impacts of the national economy and fiscal policies on the regional economy. This model is called the JNREM (Japanese Nine-region Econometric Model). The model is multi-sectoral and linked with the national model developed by CRIEPI. The JNREM determined local output, investment, consumption, employment, wages, unemployment, population, electricity demand and so forth. With the other models of CRIEPI such as the World Energy Market Model, the Japanese Macro-economic Model and the Japanese Energy Model, the JNREM can offer the comprehensive prediction of Japanese regional economies which is consistent to that of the national economy, energy demand and the world energy market.
The model has the following characteristics. First, it is multi-sectoral so that not only economic behavior of each region is analyzed by sector but interaction among sectors in each region is treated. Second, the JNREM is so cautiously built that it is possible to determine all endogenous variables for the national economy and the regional economies. This property is especially important in forecasting the behavior of interregional migration and of manufacturing investment. Third, the capital utilization rate is employed in manufacturing production to reflect adjustment process in the manufacturing sector. The ratio of actual demand for electricity (kilo-watt hours) to the contracted amount of electricity (kilo-watts) is used as a proxy for the capital utilization rate. Fourth, in sharp contrast with the previous multiregional models of Japan, regional unemployment is explicitly included in the model. This enables us to analyze the adjustment process of demand-deficient unemployment, which is sensitive to business fluctuations in local labor markets along the Phillips-type wage equation. Finally, the model reflects the differences in the production structures across sectors. Manufacturing outputs are mainly determined by supply-side factors such as capital and labor inputs, and technical progress. On the other hand, demand-related factors such as consumption and housing investment mainly determine outputs in the tertiary and construction sectors.
For the period from 1985 to 2005, simulation analysis of four scenarios is carried out wiht the JNREM to examine the behavior of the entire model and impacts on regional economies of key exogenous variables such as oil prices, regional price index, and regional allocation of public investment. The impacts of these exogenous variables are examined in comparison to the standard scenario which is based on the forecasting results of CRIEPI's macro-economic model and the world energy model.
In the standard scenario, Kanto has the highest growth rates of gross product and population. Compared with the standard case, high energy cost decreases output growth in each region. Concentration of labor and capital in the Tokyo metropolitan area, which is depicted in the model as rapid rise in price index of Knato, diminishes labor migration from other regions to Kanto, and reduces the difference in income between Kanto and others. The increase in regional share of public investment for preipheral regions narrows earnings and unemployment gaps between peripheral and central regions. However, intensive allocation of public investment to peripheral regions brings about less national production, and this indicates the trade-off between efficiency in terms of the national economy and equity among central and peripheral regions in terms of economic defferences between two groups of regions.

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Regional disparities in terms of income and employment showed marked decline under various regional policies during the Period of Rapid Economic Growth. However, the drastic changes in Japanese industries after the Oil Crises in 1970s have caused structural recessions in some regions which have been dependent on resourceand energy-intensive industries. Furthermore, the economic activities are rapidly concentrating in Tokyo Metropolitan Region under the internationalization of Japanese economy. Regional income disparities began to widen again since the early 1980s under these circumstances.
This paper aims to examine the trend of industrial differences in Japanese regions in the postwar period, and to identify its current problems. Three analytical methods, namely the analysis of coefficient of variation, the rate-share analysis, and the shiftshare analysis are applied using employment data for the years 1955 to 1985.
Major findings of the study are summarized as follows:
(1) Manufacturing sector showed a clear decentralization of employment during the period 1960-1985, whereas the decentralization of tertiary sector was not very clear.
(2) Marked decentralization was found in the high-tech machinery industry which have been rapidly concentrating in North and South Tohoku Regions. Despite the recession of manufacturing industries after the Oil Crises, these regions showed remarkable employment growth.
(3) The shift-share analysis of manufacturing sector has showed low growth performance in the western part of Japan. These regions had been specialized in the heavy and petoro-chemical industries during the Period of Rapid Economic Growth, and suffered much damage in the Oil Crises.
(4) Locational patterns of tertiary sector differ among industries. Finance, retail and wholesale industries have been concentrated in metropolitan regions, whereas local regions have been specialized in the service industry.
(5) The shift-share analysis of tertiary sector has identified little difference of growth performance which comes from the industrial structure of each region. However, a marked difference has been found in the differential shift components between metropolitan and local regions, which indicates a clear gap of locational attractiveness among them.

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This is an empirical study to assess the long-run economic effects of airport construction. Kansai metropolitan area, the western big urban area in Japan, has decreased her relative shares in various economic activities. Her reactivation is of great concern not only for local benefit, but also for realization of a well-balanced national development.
The extremely limited capacity of air transport is one of possible causes for the marked decline in the relative importance of Kansai. At present, the Osaka airport is the only domestic and international airport in Kansai area. However, the daily flights are limited due to environmental considerations. It is true that new Kansai international airport under construction will improve the international service, but still a big potential demand for domestic service will continue to exist. Thus our main concern is to assess the economic effects of construction of Kobe domestic airport planned by the city authority, assuming the combined use with existing Osaka airport and new Kansai international airport. Three airports will be located roughly in a triangular position, and expected to acceralate the development of Kansai area.
A new specific classification of industries is included perticularly attaching importance to airport service, and divided whole industries into three: airport-related secondary, airport-related tertiary, and other industries. We divided Kansai into four regions (Kobe, Osaka, Kyoto and others), and divided the rest of Japan into ten regions. The variables of Kansai four regions are explained endogenously, and the variables of others serve as exogenous variables. We assumed two transport modes, air and railway, between regions, and the time and cost distances are measured between main JR stations in case of railway, and the distances by air are calculated including access time and cost to JR stations. General distance is the sum of cost and time multiplied wage level, and first defined for each transport mode of air and train, and then aggregated by a weighted average with mode ratio function, and used to define various potential variables. These potential variables are intensively used to express the interregional interactions and also the possible impacts of changes in distances.
We constructed an econometric model with 227 equations, out of which 60 are structural equations and 167 are definitions. Each equation was estimated by the time-series data between 1965 and 1984. The model explained the demography (social and natural changes of population), sectoral activity (employment, capital and output) and other variables (income, land price and others) of Kansai four regions.
We ran a simple projection for 1985-2010 assuming the existence of Osaka airport and the opening of new Kansai airport after 1993. Kobe airport will be constructed between 1992 and 1997. We ran the second simulation in considering the possible impacts through construction work and the opening of Kobe airport. Total cost of construction will be 280 billion yen (1988 price), and the estimated travellers by air will be 5.7 million at 2010. The opening of the airport will have direct impacts through these public works and increasing passengers, and also changes of distances by air and resulting changes in potentials.
By comparing two simulations, the effects at 2010 will be as follows: population increase 68410 and 79958, employment increase 49154 and 83455, income increase 2269 and 2884 billion yen, in Kobe and in whole Kansai respectively. At first we proved a high benefit-cost ratio for the construction project of Kobe airport. Secondly we found out a big spill-over effects to surrounding regions in Kansai, as 12 to 41 percent of total increase of population, employment and income were realized in those regions.

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The problem of how to make Japanese agriculture coping with the import liberalization of rice is the problem of whether to be able to farm under such circumstances or not. This research was done simulation of agrecultural management program to dynamic development for small rural village, in case of Asoda area, Saita-town, Kagawa-prefecture. By using the simulation model, the optimal development program of agrecultural management was obteined and the effectiveness of 1) the drastical structural reform plan of arable land and 2) the group utilization scheme of all the land in a region are investigated.
In section 2, the simulation model for agricultural management program based on Dynamic Linear Programming was presented. In section 3, the simulation model in case of Asoda area was specified, and the results of simulation are estimated. From the results of simulation, a way that agrecultural management under the murket mechanisme shoud be was shown.

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The recent burst of the land price, which started in Tokyo Central Business District, created severe difficulties to many local municipalities. When they engage in the future city planning, they have to project the future trends of land price and of other related variables as the basic data to evaluate the future development of the local economy.
For this purpose this paper presents an empirical study with the quantitative model in which land price plays an important role. I took up the case of Mitaka city, which is located at the western suburb of Tokyo CBD and served as a bed-town for decades, and is currently experiencing a big land price burst. I divided Mitaka into four districts based upon the different trends of land price and density of population. I collected the mesh data of land prices and population, and then aggregated for four districts, and used them in combination with other variables to construct the model. The model cosists of five blocks; demography, industrial activities, land use and land prices, households, and public sector. The number of equations is 42 including definitions. In causal chains the land price and population of each district is explained by aggregate variables as well as the land price of CBD. Then two avarage land prices are defined by weighting; each weighted by population or area of districts. The former expresses the actual burden of land cost for residents and the latter expresses the land cost of new acquisition. When the land price was used as an exogenous variable in other equations, I selected one of the two which gave the better fitting.
One of the feature of suburban city is the strong ties with CBD, so I took up many indices which represent the trends of Tokyo CBD as well as Japan and used as exogenous variables to stress these ties.
After confirming the sufficient fit of the model for 1971-85 by the final test I used the model to produce a conditional forecast until 2000 assuming the reasonable trends for Japan and Tokyo CBD. The results showed a strong change from bed-town to a commercial area which is accompanied by changes in land use in future. The population will increase by 15794 (9.8 percent of current figure). The model projects the population and land price by district, thus is able to assess the possible effects of changing regulations for construction. Now the city authority of Mitaka plans to relax the building coverage ratio. Another projection predicts that this deregulation will produce the further increase of population by 3768 out of which 3254 is the direct effect and 514 is the indirect effect. Thus the deregulation of buildings may improve the current housing condition, but the effect will be largely diminished through accelerating social population inflow.

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Construction of a new road will not only create new traffic flows, but also it will change the current of traffic flows using other roads; traffic flows using someroads will decrease and traffic flows in using other roads will increase. Therefore, if we intend to appraise the benefits brought about the road newly constructed, we have to measure the benefits gained from the existing roads as well as from the new road.
Regarding methods of measuring the total benefits brought by the new roads, some investigations have been made by many authers, prominently by H. Mohring. Under an assumption that congestion tax is levied, he shows that the total benefit can be measured by summation of the difference of consumers surplus in each roads which were derived by the construction of the new road. However, as he did not consider the structure of road networks concreately, it is not clear how to aggregate these differences. On the other hand, Jara-Diaz and Friesz took up a most simple road network; that is a parallel circuit. They analized the benefits derived from a transportation investment in the network. But their network structure is so simple that the signification of the result from their analysis is limited.
In this paper, we will assume rather complicated structure of networks, then we shall measure the benefits from a new road construction on the network structure. We obtain the results that in a parallel circuit the composite supply curve of the two roads is produced by adding the supply curves of the two roads horizontally, and in a sequential circuit the composite supply curve of the two roads is produced by adding the supply curves of the two roads vertically.

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This paper examines the theoretical aspects of telecommunications market in Japan. The market has been developed through monopolistic supply by Nippon Telegraph and Telephone Public Corporation (NTTPC), which is now privatized and named Nippon Telegraph and Telephone Co. Ltd., (NTT). After privatization, three market competitors entered the supply of trunk line telecommunications services. They provide alternative services by leasing NTT's terminal facilities. However, charges for long-distance calls have not been so lowered as much as were expected.
Focusing on economic explanation and interpretation of the pricing of long-distance telecommunications in Japan, optimal two-part tariffs of the utility supplier faced with market contestants are designed in the context of the privatization of NTTPC, the entry of competitive firms and the innovation of relevant technology. Demand externalities, which are important for the economic analysis of telecommunications, are explicitly introduced. Optimal two-part tariffs are derived through (i) profit-maximizing, (ii) welfare maximizing, (iii) profit-constrained welfare maximizing formulae.

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There have been many studies about estimation of residential bid rent function. Most of those studies commonly use ordinary regression model as a tool of analysis. In ordinary regression models, the deviations of the data set from the regression line can occur because of measurement errors and/or modeling errors.
In this paper, a new approach, that is, a fuzzy regression analysis based on fuzzy set theory is introduced for estimating land price function. In the fuzzy regression model, the deviations between the observed values and the estimated values are assumed to result from the fuzziness of a system structure itself. From this point of view, we use this model for the estimation and obtain the fuzzy number of a parameter vector in a linear land price function which fits well with the land price data which are accumulated along major railway lines in Tokyo metropolitan area. This paper is the first step to explain the vague urban phenomena in which human recognition and decision-making are involved.

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The purpose of this paper is two fold. One is to investigate the dynamic behaviors of the duopolistic firms. The other is to derive the government optimal policy to maximize the discounted sum of the future economic surplus given the behavior of the firms. The control variable of the government is the public transportation fare, which can be considered as the proxy of the degree of the competitiveness in such a spatial duopolistic economy. When the fare is high, the profit of the firms would be low and the speed of the capital accumulation is slow since the investment is financed by the current profit. In this way, the government can control the speed of the capital accumulation of the economy.
Two firms act as Hotelling-type competitors in the short run. In the long run, they aim to maximize the discounted sum of the future profits. The control variable of each firm is the level of the investment to improve the efficiency of the production. We assume that the dynamic competition is also a Nash type as well as in the short run, where each firm considers the time path of the opponent's control variable as given.
The equilibrium path for this dynamic game is characterized as follows: The solution path is the bang-bang control, since we assume that the profit function is linear in investment, which is bounded. The investment should be nonnegative and should not exceed the current profit. In ordinary optimal growth theory, the firm accumulates the capital until the marginal profit equals the disconut rate plus the depreciation rate. But in our dynamic game, there exists the case where the firm with the larger discount rate ceases to accumulate its capital before it reaches this point and decreases capital by means of depreciation. If not, the firm can not reach the optimal stationary state because of the behavior of the opponent, who has the smaller disconunt rate and is still accumulating the capital. At the stationary state, the firm with the smaller discount rate has the greater capital.
Given the optimal behaviors of the firms, the government plays the role of the Stackelberg's leader in this dynamic game. We assume that the public transportation fare has the upper and the lower limits. The optimal path of the government control variable is characterized as follows: In the early stage, the transportation fare is high and lies at the upper limit. This implies that the degree of competition is sufficiently low, and the firms earn the monopoly profits and the speed of the capital accumulation is high at the sacrifice of the consumer's surplus. But in the later stage, where the capital is sufficiently accumulated, the fare drops to the lower limit. That is, the optimal solution for the government is bang-bang control.
The larger the government's discount rate of the future surplus, the earlier emerges the switching of the transportation fare from the upper limit to the lower one to enjoy the greater economic surplus in the early stage at the cost of the future surplus.
We show that the imperfect competititon is desirable for some periods if not all.

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The classical spatial price equilibrium models of Takayama and Jadge was based on trade market of homogeneous goods with perfect information about prices and market, however, as pointed out by many recent literatures, the purchasers are usually spread over several supply regions because of product differentiation, imperfect choice heterogoneity, gravity-type trade models derived from entropy or cost minimization theory have been presented as flow models without a price adjustment mechanism.
In the excess supply conditions existing currently in many bulk commodity markets, the producers are increasingly in the position of price-takers. This implies that, in the short run, their main decisions relate to spatial choice of markets and setting of production levels within the currently available capacity.
In this paper, at the outset, a random utility theory is introduced to handle dispersion about the profit-maximising choice of markets, then, taking market prices and available production capacity as given, the equivalent mathematical optimization model is presented to deal with dispersion of production levels by suppliers. It is shown that the resultant trade model is consistent with the one derived from the random utility theory. While the model assumes that the producers in the short run set their production levels and choose their markets to maximize profits under conditions of uncertainty, the buyer regions are merely assumed to adjust prices through exogeneous demand functions to equilibrate with the quantities supplied. This Walrasian price adjustment process towards equilibrium is examined and proofs of existense, uniqueness and stability are warranted by decreasing property of the regional demand functions and the spatial supply functions derived from the the mathematical optimization framework being with a finite dispersed parameter.

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