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Is Retail Service Productivity Really Low in Japan? -- Numerical experiment based on Shepard's model --

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  • NAKAJIMA Takanobu

Abstract

The middle 1990s began a serious economic recession for Japan known as the "lost decade". Productivity appears to be a contributing factor to the recession with service sectors receiving an especially bad reputation for low productivity compared to the manufacturing industries. But this assumption has not been analyzed in terms of service output definition. This paper focuses on the relationship between the output definition and productivity for the retail trade service sector, both of which are often quite ambiguous. Applying the theoretical model of Shepard(JPE:1991), we define the retail trade service output as the consumer's satisfaction with the service and try a numerical experiment on margins and productivity according to the scenario that describes the environmental changes in the Japanese retail trade service market. The simulation results show the substantial effect that deregulation has on lower retail trade service margins. In the case of retail trade service sectors, where production and consumption occur simultaneously, the productivity level depends highly on the definitions inherent in a consumer's evaluation and satisfaction. Hence, the simple productivity comparison across regions might be misleading and sometimes meaningless.

Suggested Citation

  • NAKAJIMA Takanobu, 2007. "Is Retail Service Productivity Really Low in Japan? -- Numerical experiment based on Shepard's model --," ESRI Discussion paper series 193, Economic and Social Research Institute (ESRI).
  • Handle: RePEc:esj:esridp:193
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    File URL: http://www.esri.go.jp/jp/archive/e_dis/e_dis200/e_dis193a.pdf
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    References listed on IDEAS

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    1. Nishimura, Kiyohiko G. & Nakajima, Takanobu & Kiyota, Kozo, 2005. "Does the natural selection mechanism still work in severe recessions?: Examination of the Japanese economy in the 1990s," Journal of Economic Behavior & Organization, Elsevier, vol. 58(1), pages 53-78, September.
    2. Tsutomu Miyagawa & Yukie Sakuragawa & Miho Takizawa, 2005. "Productivity and the Business Cycle in Japan: Evidence from Japanese Industry Data," Hi-Stat Discussion Paper Series d05-108, Institute of Economic Research, Hitotsubashi University.
    3. Jorgenson, Dale W. & Nomura, Koji, 2005. "The industry origins of Japanese economic growth," Journal of the Japanese and International Economies, Elsevier, vol. 19(4), pages 482-542, December.
    4. Tsutomu Miyagawa & Yukie Sakuragawa & Miho Takizawa, 2005. "Productivity and the Business Cycle in Japan -Evidence from Japanese Industry Data -," Discussion papers 05022, Research Institute of Economy, Trade and Industry (RIETI).
    5. Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2008. "Zombie Lending and Depressed Restructuring in Japan," American Economic Review, American Economic Association, vol. 98(5), pages 1943-1977, December.
    6. Ehrlich, Isaac & Fisher, Lawrence, 1982. "The Derived Demand for Advertising: A Theoretical and Empirical Investigation," American Economic Review, American Economic Association, vol. 72(3), pages 366-388, June.
    7. Betancourt, Roger R & Gautschi, David A, 1993. "The Outputs of Retail Activities: Concepts, Measurement and Evidence from U.S. Census Data," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 294-301, May.
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