This paper shows that despite the presence of increasing returns to scale caused by public inputs in the specific factors economy, the production possibility frontier is still concave to the origin if the public input market is Marshall stable. It also shows that the symmetry assumption is a sufficient condition for the Marshallian stability. When international trade takes place, the symmetry assumptions can guarantee the validity of most but not all results of the standard specific factors model that are concerned with the effects of changes in terms of trade and factor endowments.

JEL Classification: C62, F14, H41

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In this paper we present the results of an empirical study on small and medium enterprises (SMEs) in the food processing industry in Indonesia. The purpose of this paper is to analyze the correlation between competitive forces, competitive strategy, and business performance of these SMEs. We provide a description of SMEs in the food processing industry in Indonesia based on a field survey that was carried out in three provinces, namely Jakarta, Banten and West Java. The primary data collected was analyzed by regression and correlation analysis using the path analytical approach. The relationship between competitive forces and competitive strategy as well as the relationship between competitive strategy and business performance was examined. Using the path analytical model, we conclude that competitive forces influence the business performance of SMEs in the food processing industry with competitive strategy as a moderating factor.

JEL Classification: L66, O31, Q12, Q13

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In this paper we analyze patterns of trade in a Ricardian trade model with joint production. First, we treat a simple two-country and two-good case to derive the necessary and sufficient conditions for complete specialization of the world economy with joint production. Then, we move to a three-country and three-good case and show that, if joint production is allowed to exist, multiple production points of efficient complete specialization may occur. This is shown by a numerical example with illustrations of the world production frontier. We conclude that the conditions for complete specialization in joint production drastically differ from the case without joint production.

JEL Classifications: D24, F14

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Vietnam is deepening economic relations with East Asian countries because of economic growth after adoption of the economic reform policy called Doimoi. Economic analysis of Vietnam needs to consider such economic linkages, but there are few empirical studies on Vietnamese inter-regional relations. This paper aims to analyze the industrial and economic inter-linkages between Vietnam and other East Asian countries. We estimated an expanded version of the Asian Inter-regional Input-Output (E-AIRIO) table and measured induced production caused by investment and export in view of repercussion effects that raise Vietnamese production through inter-regional trade by reflexive ways in other countries.
The simulation results demonstrate that, first, the influence of Vietnamese investment and export is not large when compared with China, but is not negligible. Second, the repercussion effects of investment and export in Vietnam were respectively 10% and 20% of the total induced production. Third, Thailand also received similar effects from East Asian countries, but Thai repercussion effects via only Vietnam were less than 1% of the induced production. Fourth, among other East Asian countries, Japan experienced the greatest amount of ripple effects from Vietnam.
From the above results, we conclude that the economic development policy should consider repercussion effects, and policy coordination among East Asian countries is important for steady growth. To build such policy coordination, inter-regional I/O tables like E-AIRIO can provide useful information.

JEL Classification: Q27, Q42, R15

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There is vast literature on the theory of optimal tariffs to maximize the economic welfare of a home country. The optimal tariff rate is positive in large countries, but the rate is zero in small countries. However, little attention, has been paid to the market structure in the concerned industries. Most of the literature focuses on a short run analysis or a long run analysis. In this paper, we present another concept of period, the intermediate run. In an intermediate run, each firm freely moves among industries, while the total number of firms in an economy is fixed.
To address this issue, we developed an international trade model suitable for explaining the intermediate run. A fixed number of oligopolistic firms operate and each firm can locate (operate) either in an importing industry or a non-traded industry. The two industries have an identical market size, each domestic and foreign firm has the same cost function and each industry engages in Cournot competition.
In this intermediate run model, the profit of each domestic firm is equalized in the two industries because each firm moves among industries to seek a higher profit. When free trade prevails in the importing country, domestic firms insufficiently locate in the importing industry from the economic welfare viewpoint. By imposing a tariff, more domestic firms locate in the importing industry in equilibrium, the resulting industry structure of the economy becomes more efficient and economic welfare is improved. Owing to this inter-industry movement of oligopolistic firms, observed only in the intermediate run, the optimal tariff rate becomes higher in the intermediate run equilibrium than in the short run equilibrium when the number of firms is fixed in each industry, that is, the short run.

JEL Classification: F12, F13, L13

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The purpose of this study was to investigate international cooperation on pollution control between asymmetric countries under uncertainty. We considered any two countries that are asymmetric with respect to their technological level and the amount of environmental damage they incur. Production processes result in the emission of pollutants that are added to the existing pollution stock common to both countries. The stock of pollution evolves stochastically, according to the geometric Brownian motion. The governments of the two countries set their pollutant emission levels at the Markov perfect equilibrium to maximize their expected net present value of social welfare. In addition, they set their pollutant emission levels at cooperative equilibrium to maximize the sum of their expected net present value of social welfare.
In cooperative stochastic differential games, a credible cooperative agreement must be subgame consistent. Subgame consistency ensures extension of an optimal policy to a later starting time, and any possible state brought about by prior optimal behaviour of the governments remains optimal.
We considered a cooperative game in which the governments of two countries agree to maximize and divide the sum of their expected net present value of social welfare in a way that shares the gain from their cooperation proportional to the relative sizes of their expected non-cooperative net present value of social welfare at every instant of time. In conclusion, the country with a higher technological level or that incurs lower environmental damage obtains a larger instantaneous payoff at the subgame consistent solution.

JEL Classification: F18, L13, Q58

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In this paper, we analyze the relationship between public education and wage inequality. In public education systems, all students receive the same amount of education, so it is generally thought that the system equalizes wages among workers. Then, does the expansion of public education reduce wage inequality? In a two sector model where agents choose their occupation based on comparative skill advantages, we show that the expansion of public education increases wage inequality. The economy has two types of commodities, goods for consumption and educational services that have different values of skill elasticity in production. In addition, there are high and low skilled workers. As the skill elasticity of educational services is higher than goods for consumption, skilled workers choose to work at producing educational services and unskilled workers choose to work at producing goods for consumption. When the government increases the supply of education, the relative price of education varies and the demand for skilled workers increases so wage inequality increases.
We also analyze the effect of public education and tax rate on the growth rate and derive the optimal tax rate to maximize this growth rate.

JEL Classification: I28, O15, O41

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This paper analyzes whether economic growth of the Seoul Metropolitan Area (SMA) has a negative effect on other regional economies in Korea. The cause-effect relationship of economic growth between SMA and other regions in Korea (ROK) is analyzed with respect to regional potential outputs and output gaps. The regional potential output is derived from production function and NAIRU (Non-Accelerating Inflation Rate of Unemployment). The estimated results indicate that there are no significant cause-effect relationships on regional potential output between SMA and ROK. The output gaps, on the other hand, have a positive relationship between the two regions. The net population inflow to SMA increases the output gap of SMA and reduces the output gap of ROK.

JEL Classification: R10, R58

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Agricultural damages which are probably caused by climate change have already been observed in Bangladesh. In such a worrying situation, projections of possible future food situations are necessary. This paper develops a rice supply-demand model of Bangladesh, and compares the magnitude of possible climate change impacts on future food situations. One simulation result shows that from the point of view of national food security, high temperature impacts on production are much more serious than other impacts. Therefore, research and development strategies designed to address long-term national food security should place priority on high temperature impacts in rice production.

JEL Classification: Q11, Q18, Q51, Q54

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In this paper, we verify the impacts that expanded bio-fuel consumption may have on reduction of CO₂ emissions from automobiles in the household sector. We believe increasing production volume by popularizing bio-fuels may help increase the household income of farmers that produce raw materials for bio-fuels and increase the total household Equivalent Variations (EV) .
First, considering the tax privileges provided for E10 (10% ethanol blended) and B5 (5% bio-diesel blended) , the indirect tax rate for bio-fuel decreased by 85.34% when subsidies were deducted from the taxable income. Based on these estimations, we performed a simulation to detect the effectiveness of a campaign popularizing bio-fuel usage alone by utilizing the Computable General Equilibrium (CGE) model to reproduce the actual situation of bio-fuel popularization in 2007. As a result, the rate of change in CO₂ emissions from automobiles decreased 0.266% and the total household EV gained 1.14 billion baht due to increased farmer and non-farmer household benefits in areas other than the Greater Bangkok Metropolitan. In addition, simulations in which the indirect tax rate for bio-fuel gradually decreased from the level in 2007 showed that the consumption of bio-fuels has been rising and the reduction of CO₂ emissions has been expanding to increase the total household EV.
Second, when blended fuels such as E10 and B5 are fully used by the household sector it is even more important for the Thai government to provide subsidies to the bio-fuel industry and industries supplying bio-fuel materials for promoting bio-fuel usage policies and sustained economic development. To secure financial resources to achieve this purpose, the government should raise indirect taxes for the services industries. At the same time, the government should also take measures to decrease the direct tax rate for households. In our simulation based on this scenario, it was possible to reach a decrease of 0.685% in the reduction of CO₂ emissions by substituting bio-fuels for fossil fuels even though fuel consumption expanded with an increase in the income of farmer households. As spillover effects on activities in the production sector, we found the following. First, the negative effects on the agriculture food processing industries by preferential treatment of the bio-fuel industry and bio-fuel related industries remained small. Second, the production volume of other agriculture products such as livestock, fishery, rubber and other crops decreased because production shifted to bio-material crops for the bio-fuel industry. Third, an increase in the indirect tax for service industries had the largest negative effects on the transportation and communication industries.
Based on the above, if the Thai government can promote bio-fuel usage policies as planned, it is possible not only to reduce CO₂ emissions but also to increase the benefits for the household sector.

JEL Classification: C68, O53, Q42, R13, R38

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The purpose of this paper is to examine the processes and results of different type autonomies that attempt to organize and determine problems with a new local tax for environmental conservation of forests. Especially, I analyzed whether a new local tax is valid to obtain funds for conservation and can be called a participatory tax.
The results show that the autonomies do not explain the reasons for the amount of tax revenue valid to cover the projects, and the tax revenue cannot cover the costs of the projects. Therefore, there is doubt as to whether new local taxes for environmental conservation of forests are valid for obtaining the costs of a project and whether they can be called participatory taxes.
An analysis of a second phase of local taxes indicates some autonomies change the purpose of taxation from charging for water resources to charging to prevent global warming. In conclusion, a local tax isn't suitable as a new fund to share the benefits.

JEL Classification: H71, Q23, Q28

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Nitrogen and phosphorus mainly from non-point source pollution are the major nutrients that cause eutrophication and degrade water quality. The most serious environmental problem of Dian Chi Lake is eutrophication. Continuing deterioration of the water quality of the lake threatens the drinking water of Kun Ming City and greatly affects local economic development and people's lives. Therefore, in this study, we chose Dian Chi Lake as a case study to consider all factors that influence water quality by focusing on non-point source pollution. The interrelationships between environmental and socio-economic indicators and variables were described and integrated into a dynamic linear mathematical model. The computer simulation approach was used to make comprehensive environmental policies and to evaluate the most cost effective measures to effectively improve water quality. The simulations were run with the computer-based programming software called LINGO.

JEL Classification: C61, Q01, Q53

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In an age of falling birthrate, aging and a population decrease in Japan, the priorities of housing issues are changing from how to develop new housing to how to sustain suburban communities. In our former study, the relationship between the conditions of a location such as accessibility to the city and changes in the population structure of a housing estate group was analyzed, and the sustainability of each housing estate examined using site conditions of the housing estate in Hiroshima City. The aim of this study iwas to clarify the relationship between aging structure and consciousness of the residential environment based on a questionnaire survey of three suburban communities in Hiroshima City. The relationship of the residential environment based on consciousness for living conditions with the change in the population structure of housing estate group was analyzed to clarify the population changes and conditions necessary to make the housing estate sustainable. The major results are summarized as follows: 1) the population is decreasing in suburban communities, so the satisfaction rating of the residential environment such as daily shopping is low, 2) some support from governmental bodies is required to rebuild structures such as dwellings.

JEL Classification: R20

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This paper examines consensus-building at Kawagoe city in Saitama prefecture and reviews the adoption of Machidukuri-kihan by Kura-no-kai, a non-profit organization. Kura is a traditional Japanese building that is mainly used for storage. There are many Kuras in Ichiban-gai, the main street of Kawagoe. The Kura-no-kai is comprised of the storeowners of Ichiban-gai. Machidukuri-kihan is the town-building rule based on Pattern-language which was developed by C.Alexander, and he was influenced by the ideas of the linguist N.Chomsky. The book by C.Alexander is very popular in the field of town-building.
The preservation of a historical district is very difficult because the right of possession and property is complicated. This study considers the role of Machidukuri-kihan. Previous studies on this issue were published by Dr. Okazaki and Dr. Harashina. Characteristics of and hinderance factors for consensus-building include repulsion for legal restrictions, improvements made to the amenities and campaigns against laying power lines underground. Machidukuri-kihan has been adopted as a design code for the Ichiban-gai and has proven to be a good code.

JEL Classification: R5, R28, R58

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This study uses the railway transportation data of China to analyze trends in provincial logistics. In particular, the railway O-D (Origin and Destination) table (formally titled “ Freight Exchange of National Railway between Administration Regions” ) in the “ Year Book of China Transportation and Communications” is the only material that supplements provincial logistics in China.
First, the study calculates the shares among provinces. Second, the study estimates the future distribution by stochastic models represented by the Markov chain. Third, the study suggests a simple indicator that analyzes the changes in shares. According to this indicator, 0% shows no change in shares, whereas 100% show that share changes from one side to another. These results clearly indicate the trends and patterns in provincial logistics change slowly, resulting in less than 10% share change and stabilization of future convergence distributions.
Therefore, few changes can be expected in the provincial logistics trends in China However, this study is limited by the data obtained, because it does not analyze other modes of transportation. If the trends in logistics do not change through time, it is difficult to suggest a logistic policy, especially in terms of railway transportation, to reduce regional disparity. The policy for constructing a railway logistic center in poor regions to reduce disparity is not realistic. On the other hand, the demand for railway construction based on actual demand will continue for a while. As a result, there is a possibility the logistic policy will be influenced against our expectations if the trends in logistics greatly change. Therefore, a logistic policy for economical reasons is indispensable.

JEL Classification: C49, O53, R49

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Trends of a decrease in the Japanese population have continued since 2004. However, the populations of 11 prefectures are still growing, so a tendency for uneven distribution of populations has increased. This trend can also be seen in the relationships between the provincial cities and agricultural, mountain and fishing villages. The situation of this tendency in rural villages has continued for more than ten years. In agricultural, mountain and fishing villages, there are many villages that are not able to maintain their communities because of a decrease in population and an aging society.
Though there are many studies regarding farm villages, studies on fishing villages have not been reported. In this study, we analyzed the data available from the “ fishing port village investigation” and “ fishing industry census” , etc. and describe the following;
a) Details of the present conditions of fishing villages,
b) Classification of fishing villages,
c) Proposals for promotion of fishing villages in the future.

JEL Classification: R00

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In Japan, business continuity plan/management (BCP/BCM) is recognized as a very significant issue as in other advanced countries, because of the great earthquake disasters in 2004 and 2007 in Niigata Prefecture that caused disruptions of many small and medium sized production companies as well as forcing all Japanese automobile manufacturers to cease production for several days. However, according to some reports the BCP establishment rate in Japan is still low. This study focuses on Ojiya City, which was seriously affected by the Niigataken Chuetsu Earthquake in 2004. The production industries have a concentrated presence in Ojiya City, making it an excellent case study for clarifying the disincentives to BC planning at small and medium sized enterprises (SMEs) as well as demonstrating a new concept for increasing regional resilience, because it represents areas of potential resource consolidation for cooperation within the industrial community, the regional civic community and other remote regions. As a result, several key elements are proposed that may support “ regional BCP” that may consequently lead to true “ regional resiliency.”

JEL Classification: L29, R00, Z00

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The Huai Luang Basin is located in the Udonthani Province of Northeast Thailand. The basin is a repository of wastes coming from households, restaurants, hotels, agricultural lands, pig farms and other highly industrialized zones. Huge amounts of agricultural residues and wastes are left in the field annually. Most of the local farmers are poor and have never used modern technologies to utilize residues and wastes. There are areas where wastewater is being dumped directly into the river without any treatment. Not enough sewage plants in the cities as well as a lack of strong policies to regulate wastewater management have resulted in the Huai Luang River being classified as fair status and partly polluted, particularly in zone 2 of the municipality of Udonthani. These conditions can be attributed to high population density and industrialization. The water pollution is largely associated with land based activities such as urbanization, industrialization and agricultural. The major sources of pollution that pose problems for water quality in the basin are domestic sewage and agricultural activities, different amounts of pollutant loading depend on the ecological and socio-economic conditions in each zone. The main pollutants in zone 2 where the capital city is located come from household and industrial activities. In this paper, the biomass resources, water quality, the environment and land uses are examined and evaluated. Pollutants in terms of BOD loading from households and agricultural activities in the basin were estimated for the year 2006. An integrated approach to reduce pollutant discharge into the river is outlined. A mathematical model was also developed to encourage the adoption of biomass utilization technology to improve the water quality of the Huai Luang River. Based on the results, a policy to utilize biomass utilization technologies was determined to be a very effective tool to reduce environmental pollutants in the basin.

JEL Classification: C61, Q01, R11

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