Place: Miscellaneous places around Monbetsu City (Hokkaidō) (two public/private sector bathhouses, a ramen shop, a restaurant, a karaoke parlor, and more than 100 bars).
Background: According to newspaper articles, plus several visits and interviews between 2000 and 2009 by the author and other activists, since 1995 Monbetsu’s local restaurateurs’ association (inshokuten kumiai) created and sold standardized signs in Cyrillic saying “Japanese Only Store” (Nihonjin sen’yō ten) that went up on over 100 bars and restaurants in the Hamanasu Dōri nightlife district. Interviews with bars displaying the signs revealed fears of Russian sailors’ custom, including the language barrier, drunken unruliness, nonpayment of bills, rumors of rape, surrounding Japanese customer dissatisfaction, and ties to Russian organized crime (although many interviewees said they had no actual experience with any of these issues – the sign was a preventive measure); some refused the author’s business even though he is not Russian and was accompanied by other Japanese. Three restaurants and a karaoke parlor expressed similar sentiments, and said they would have refused the author had he not been a fluent Japanese speaker. Two bathhouses (one private-sector, one public/private (dai-san sekutā)) claimed drunk and unruly Russian bathers were driving away Japanese customers).
Understanding how the design of policy to support R&D influences its effectiveness, and how loan programmes should be optimally designed to maximise welfare, is critical to formulating effective, cost-efficient policies. This column uses mechanism design to analyse the optimal structure of R&D loan programmes. The results suggest that optimal policies should ‘target the middle’, as low-risk projects will be funded by the market and high-risk projects are not likely to generate sufficient social payoff to justify support. Moreover, the optimal policy is likely to differ across technology areas, and between industrialised and emerging economies.