An examination of Japanese import markets

There have been debates on the trade issue between the U.S. and Japan. It is claimed that Japan exports too much and imports too little. Economic activities by Japanese firms in U.S. markets have been discussed in several articles. This dissertation investigates the economic decision rules for imports by Japanese firms;Japanese visible import restrictions such as tariff or quota are minimal among industrialized countries. One of our interests is in the governmental role in the trade. Several possible regulations for imports by the public and private sectors are introduced in the model presented. The model clarifies how import price and domestic cost affect domestic economic variables in each hypothetical environment. The predictions from the model are shown to be subject to the market structure. A presence of quantitative restrictions is empirically tested using data for sixteen commodities. While two of them show competitive evidences, the others are unfitted to the model because cost changes in domestic production do not actually affect domestic variables. The model also predicts that the more competitive the market is, the larger pass-through should be. This is tested using the production concentration ratios. The data do not support that the concentration decreases the degree of transmission;The other findings are as follows. The pass-through coefficients vary across industries. The symmetry of tariff and exchange rates are supported for most of the data. Exogeneity of import prides are rejected for five commodities;Soybeans are one of the sixteen commodities in the above testing. The trade environment seems fairly competitive. Bresnahan's idea to measure the market power coefficient is applied for this market. The empirical testing assures the competitiveness over the whole period by the statistically insignificant market power coefficient. For several years after the U.S. embargo in 1973, the data show unusual high wholesale prices and the coefficient is statistically significant. The welfare loss and exchange rate transmission are reported. The reason of the statistically significant coefficient for the sub-period remained to be argued. The marketing risks under uncertainty enlarged by the embargo and speculative activities by importers during the unusual inflational period are possible explanations.