Abstract | PDF (397 kilobytes)

This note proposes a new testing procedure that can alleviate the size problem associated with semiparametric tests of stationarity. The note is focused on The test by Kwiatkowski, Phillips, Schmidt and Shin (1992) considering its popularity in the literature. The testing procedure of this note employs sample-split and the Bonferroni test. The sample is split into two parts, one corresponding to the odd index and the other to the even index, and the KPSS test is applied to each subsample. The two KPSS tests are then combined using the Bonferroni principle. Simulation results demonstrate that this procedure significantly reduces the size distortion of the KPSS test.

Abstract | PDF (640 kilobytes)

We consider an alternating offer model where the size of the total surplus is stochastic. Furthermore, the size changes during the time when the offer is being considered. As a result the responder may obtain more information than the proposer. We analyze how the asymmetry in ability to access good information affects the bargaining power, both in terms of the resulting share and in terms of the delay in agreement.

Abstract | PDF (687 kilobytes)

Shin and Yoo (2007) showed that under vertical market structure with the downstream market characterized by Cournot competition, it can be welfare-enhancing for the upstream firm to enter the downstream market and discriminate prices against downstream rival firms. This possibly counter-intuitive result arises from reduced double marginalization. This paper shows that Shin and Yoo's (2007) findings may not extend to a setting of horizontally differentiated downstream market. When the downstream market is horizontally differentiated, it may be socially desirable to prohibit price discrimination when the upstream firm enters the downstream market.

Abstract | PDF (724 kilobytes)

DRM (Digital Rights Management) refers to access control technologies for copyright holders to limit usage of digital contents or devices and to prevent the unauthorized use of them. We consider an information good market in which DRM-free originals (simply, ``original''), originals controlled by DRM (simply, ``managed originals'') and illegal copies are traded. We model a monopolistic copyright holder's behavior of setting the prices of an original and a managed original as well as of determining the protection level of DRM in this market, and identify and analyze the market equilibrium. We also study the welfare effect of the introduction of managed originals into the market. In the equilibrium, the copyright holder selects a protection level of DRM which equates the quality of a managed original and that of an illegal copy, and sets the price of a managed original to be equal to the unit copy cost. The introduction of managed originals into the market raises the price of an original. If the copy cost is ``relatively'' low, the introduction of managed originals enhances the social welfare. Otherwise, it reduces the social welfare.