The Japanese regulatory authority has introduced a new hybrid regulation that combines a fixed-price contract with ex ante yardstick inspection for local (public utility) gas distribution. The latter compares a firm's reported costs with those of 'similar' firms, and penalizes high-cost firms. We infer the effect of yardstick on information revelation by comparing the actual welfare level with the hypothetical full-information welfare level. Our results suggest that only the very first inspection was effective in reducing firms' incentive to report higher costs.

We employ an event-study methodology, the event being the vertical merger between Time Warner and Turner Broadcasting, distribution and programming, respectively, in the cable television industry. We assess the effects of the merger on final prices, subscriptions, and carriage and marketing decisions of Time Warner. The analysis finds several interesting facts. First, foreclosure in Time Warner markets following the merger is observed for the rival channels that are not integrated with any cable distributors. Second, the Turner Broadcasting channels that increased market shares because of this merger appeared to be foreclosed by Time Warner prior to the merger. The preference for own channels by Time Warner persisted, despite a lower quality of channel bundles in its markets; efficiency gains from the merger were not passed on to consumers. (c) 2008 Elsevier B.V. All rights reserved.

The topic of this paper is the optimal exchange rate regime for a small open economy. We argue that the best exchange rate regime depends on the policy goal. Small open economies, such as those that experienced the recent currency and economic crises in Asia, should decide for themselves what their policy goals are, and then choose the exchange rate regime that is most conducive to achieving those goals. Adopting a basket-peg with trade weights will not in general be the optimal choice. In comparison to the dollar-peg, there are three possible advantages to the peg against the basket comprising two currencies, say the dollar and the yen. If the policy goal is to maintain monetary policy autonomy, then the best exchange rate regime is floating exchange rates, provided the autonomy is used wisely. J. Japanese Int. Economies 18 (2) (2004) 183-217. Faculty of Economics, Keio University, Japan; Department of Economics, The Johns Hopkins University, USA. (C) 2003 Elsevier Inc. All rights reserved.