Project Leader

HATTA Tatsuo, Faculty Fellow

Sub-Leader

TANAKA Makoto, Faculty Fellow

Overview

This project is aimed at providing academic support to the process of electric power industry reform in Japan. For this purpose, the latest available transactions data will be used to conduct economic analyses of institutional and systemic designs for electric power markets and power transmission networks as well as performance assessment. In past years, this project focused on developing and refining a number of models for conducting quantitative evaluation and analysis. Combining these models with the actual transactions data that is now being accumulated, the project will successively undertake detailed quantitative evaluation and analysis of such practices as retail bidding and wholesale electric power transactions. Regarding problems related to specific institutional and systemic designs pertaining to markets and networks, the project will conduct surveys and applied research with an emphasis on applicability to reality while taking maintenance of reliable supplies of electric power into consideration. The scope of research will be further expanded to include quantitative evaluation and analysis of gas markets, which have a close relationship with electric power markets.

Major Research Results

RIETI Discussion Papers

• "Forward and Spot Markets for Electricity and Emissions Trading" (TANAKA Makoto)
• "Comparative Analysis of the Internal Price Gap in Community Gas and General Gas Businesses" (KAINOU Kazunari)

Project Leader

KANEMOTO Yoshitsugu, Faculty Fellow

Overview

The aim of this project is to develop evaluation methodologies (tool boxes) that can be used on the frontlines of the policy-making process. Specifically, we aim to assess the benefits and costs of each policy option, by using small-scale microeconomic models that are understandable, actionable, and facilitate the policy-making process. During fiscal 2008 the project will primarily focus on countermeasures to global warming and the Japanese-style electric power market liberalization. Regarding countermeasures to global warming, we will analyze the effects of such policies in the consumer sector and other designated fields. Regarding the liberalization of the electric power markets, we will develop models reflecting the characteristics of Japan's institutional and systemic designs and use these in evaluating various policy options.

Major Research Results

RIETI Discussion Papers

• "A Simulation Analysis of Electricity Markets: Cournot oligopoly and new entry of large-scale generators in the extra-high voltage commercial electricity market" (TANAKA Makoto and KANEMOTO Yoshitsugu)

Project Leader

HASEGAWA Eiichi, Senior Fellow

Overview

Oil prices gradually moved downward after the events of September 11, 2001 and fell below the $20 per barrel mark in 2002. Thereafter, this trend was reversed and oil prices began to rise rapidly and broke through the $100 mark at the outset of 2008. The study aims to identify the background of these developments, the impact both on oil producing and oil importing countries as well as on the global economy, and the political impact on the Middle East and the entire world. The destabilization of Middle Eastern countries, the resurgence of Russia, marked increase in oil consumption in China and India, and the status of the U.S. dollar as a key currency are all parameters with far-reaching global consequences. Japan, heavily dependent on foreign sources of energy and committed to being a participant in the international economy, has an extremely important stake in these developments.

Major Research Results

Policy Discussion Paper

• "Background and Impact of Recent High Crude Oil Prices" (HASEGAWA Eiichi)

Publications

• Rivalry for Oil among Nations, written by HASEGAWA Eiichi, Minerva Shobo, February 2009

Project Leader

TANI Midori, Senior Fellow

Overview

It appears that Japan has been experiencing a weakening of "market norms" in recent years as a result of the diversification of consumer transactions. Jointly created and supported through the efforts of the government and market participants such as consumers and businesses, "market norms" contribute to the development and stability of the entire economy and society by directing the activities of businesses in a direction that will add to the welfare of society as a whole. This project addresses the questions of what are "market norms" and what types of consumer policies will contribute to the development and stability of such "market norms." Using these questions and recent consumer related problems as a starting point, this project will undertake an analysis of laws and economics based on game theory. In addition, related literature in the fields of law, economics, sociology, political science, philosophy and others will be surveyed, and recent policy cases pertaining to consumer fraud and product safety issues will be examined.

Major Research Results

RIETI Discussion Papers

• "Consumer Policy and Market Norms: Routes of socioeconomic development abstracted from literature concerning consumer fraud and product safety" (TANI Midori)

Project Leader

TANAKA Tatsuo, Faculty Fellow

Overview

The development of digital technologies and networks has led to the proliferation of copyright infringement. Robust copyright protection is now viewed as a prerequisite in many types of businesses. From this perspective, it can be argued that stronger protection contributes positively to a knowledge-based economy. On the other hand, new services are being created in areas of weak copyright protection, such as YouTube and search engines, and businesses are emerging from copyright grey zones. This underscores to the argument that copyright restrictions prevent the birth of new industries and businesses. From this perspective, it can be argued that weaker protection stimulates creativity and heightens economic welfare. So, which of these opinions is correct?

A critical point in addressing this issue relates to the following question: At current levels of protection, what impact does the burning of personal copies have on the sale of the original product? If there is a serious reduction in sales, it would be better to strengthen copyright protection at the expense of hampering the emergence of new businesses. On the other hand, if sales are not seriously impacted, it would be better to ignore the burning of personal copies and promote the development of new businesses.

The purpose of this project is to empirically verify this question. As considerable research has already been done in the area of music software, this project will focus on video content. Specifically, we will examine the extent to which coverage of television programs (animation) and music on YouTube, Nico Nico Douga and Winny negatively affect the revenues of copyright owners. A reduction in revenues could justify the introduction of stronger protection. However, if revenues have not declined, these new services should not be restricted, and from an economic perspective, it would be desirable to capitalize on the new business opportunities created by such services.

Project Leader

TAKARADA Yasuhiro, Faculty Fellow

Sub Leader

MANAGI Shunsuke, Faculty Fellow

Overview

The purpose of this project is to evaluate the performance and system of fishery resources management, primarily from an economic perspective, with the aim of contributing to the sustained use of Japan's fishery resources. With the reduction in fishery resources and ongoing changes in the international economic environment, the output of Japan's domestic fishery industry has dropped sharply in recent years. This situation calls for the implementation of new measures. As seen from the fact that the second report of the Council for the Promotion of Regulatory Reform (December 2007) explicitly refers to reforming the management of fishery resources, this constitutes an important theme that must be dealt with promptly in order not to miss the opportunity for making policy recommendations.

This project will carefully examine and analyze the factors contributing to the declining output of Japan's domestic fishery industries in order to evaluate and analyze fishery resources management systems. In the past, Japan's fishery resources have been primarily evaluated and analyzed from the perspective of biological resource management, while limited attention has been paid to the economic perspective. Determining the economic impact of fishery resources management systems will enable the evaluation of various types of systems from an economic perspective, which will contribute to design and formulation of fishery resources management systems.

By conducting quantitative evaluation and analysis for use in administrative reform discussions and by developing concrete policy recommendations, this project is expected to help establish new directions in fishery resources management systems with an emphasis on the economic perspective.

Project Leader

SAGARA Nozomi,Senior Fellow

Overview

The world is currently in the midst of what has been called a renaissance in nuclear power generation. In the East Asian region, a total of 90 nuclear power plants are presently operating in Japan, China and South Korea. Among such emerging economies as Indonesia, Vietnam and Thailand, plans are moving forward for the introduction of nuclear power plants within seven to thirteen years. As such, nuclear power related policies have advanced to the point where they must be approached from a comprehensive perspective that covers all aspects of a nuclear power program, beginning in the planning stage and extending through to safety regulations in the operational stages. This requirement applies equally to domestic and international programs. Against this backdrop, activities for international policy harmonization in this field have been moving forward on a number of levels involving international organizations and sub-global, regional and bilateral initiatives. This project focuses on the East Asia region and attempts to determine the types of coordinating functions indispensable for international policy harmonization initiatives and the measures that Japan should implement to promote appropriate nuclear power generation introduction plans in the region while ensuring safety.