Market quality and market infrastructure in the South and technology diffusion

• Author: Makoto Yano,Yuichi Furukawa
• Published date: 01 March 2014
• DOI: http://doi.org/10.1111/ijet.12032
• Date: 01 March 2014

doi: 10.1111/ijet.12032

Market quality and market infrastructure in the South and

technology diffusion

Yuichi Furukawa∗and Makoto Yano†

In his previous work, Yanodefined market quality as a market performance measure combining

efficiency and fairness. His theory states that market quality is supported by well-coordinated

market infrastructure, including laws, rules, and compliance as well as morebasic factors such as

culture, morals, and ethics. Focusing on the free-riding aspect of technology diffusion from the

North to the South, this study demonstrates that market quality in the South can be supported by

the coordination of the South’sintellectual property law and its basic morals towards honoring

intellectual property developed in the North.

Key wor ds market quality, technology diffusion, intellectual property

JEL classification F12, O34

Accepted 31 October 2013

1 Introduction

Market quality is a new concept that Yano (2001) introducesin order to characterize the performance

of a market from the viewpoint of both efficiency and fairness (see also Yano2009). Since that book,

the concept of market quality has had a significant impact on empirical and policy research on the

Japanese economy and the development of panel data on Japanese household behavior.1Despite

this, only a few studies have so far dealt with theoretical aspects of market quality.2

As Yano (2009) explains, market quality is supported by what he calls market infrastructure,

the entire network of social arrangements in which a market functions.3In order for a market to

function well, various parts of the market infrastructure, including rules, laws, culture, morals, and

so on, must be well coordinated. According to Higuchi (2008), for example, the strengthening of

the Japanese equal opportunity employment law in 2007 did not in itself contribute to increased

workplace opportunities for Japanese women. When coordinated with community support and

family understanding, however, it raised their status from the viewpoint of both efficiency and

fairness.

∗School of Economics, Chukyo University,Nagoya, Japan; Department of Economics, Simon Fraser University, Burnaby,

Canada.

†Institute of Economic Research,Kyoto University, Kyoto, Japan. Email: yano@kier.kyoto-u.ac.jp

Partial financial support from the Keio-KyotoGlobal COE Program, the Grant-in-Aid for Specially Promoted Research

#23000001, and the Grant-in-Aid for Young Scientists (B) #23730198 is gratefully acknowledged. Yuichi Furukawa

acknowledges the hospitality and support of Simon Fraser University,at which part of the work was done.

1See, for example, Higuchi (2008). For a brief description of the panel data, see Higuchi et al. (2008).

2For a few exceptions, see Yano (2008), Dei (2011), and Ngienthi (2013).

3See Hosoda (2008) and Kurokawa(2009) for some studies on the relationship between specific institutional arrangements

and market quality.

International Journal of Economic Theory 10 (2014) 139–146 © IAET 139

International Journal of Economic Theory