Summarizing these developments with respect to the openly quoted joint


Summar iz ing these developments with respect to the openly
quoted joint 1 ist pr ice system, Ima i (9, p. 39) has stated:
69/ -Lower Japan Final Quarter,- Metal Bulletin, Oct. 10, 1975,
p: 391 -Output Down and Costs Up,- Metal Bulletin, Dec. 5, 1975,
p. 401 see, also, the: metals section in various issues of the
Japan Econom ic Journal dur ing this per iod.
70/ If a recession cartel is approved, the participants set
up a conference which eStablishes quota allocations among
members and monitors the agreement. Quotas are generally
al located on the bas is of past manufactur ing and sales vol ume.
The participants must ,submit to the conference actual monthly
manufactur ing and sal~s data along with suppor t ing documents 1
the conference is empqwered to impose penalties on firms which violate the quota. I
From 1960 on, when major steelmakers began
lower ing actual pr ices by offer ing rebates and
nonmembers of the cartel continued to increase
their market shares, the kohan prices gradually
became unenforceable. . . . IT)

 he system gradually
lost its force and turned into a price reporting
Recently, partly as a result of the antimonopoly laws, the
kohan system has ceased functioning even as a pr ice
reporting system.
For a systematic treatment of cycl~caI pricing in Japan,
table 4.17 presents data obtained from Metal Bulletin on steel
pr ices in Japan. These pr ices are Metal Bulletin's assessment
of small merchants' buying prices. One observes that compared
with the associated trough, prices rose during the booms of
1973-74, 1969 and early 1970, and 1967. Metal Bulletin began
publishing its assessment of Japanese small merchants' prices
in 1965 ¡ the data in table 4.15 for 1961-64 are -market pr ices.
in Tokyo reflecting exchanges between trading companies and
service centers.
Table 4.16 presents the Bank of Japan indexes of iron and
steel prices and all prices of wholesale commodities. The Bank
of Japan index reflects both the JOSP and the market prices.
Thus it exhibits less' price flexibility than actual prices.
Table 4.17 presents domestic unit value data of five steel
products. Both the Bank of Japan index and the unit value data
'reveal a slight decline in steel pr ices within Japan from 1961
to 1972.

It appears that list prices in Japan, as measured by the
JOSP, are extremely inflexible. However, the evidence reveals
that transactions prices vary cyclically.
Cyclical Pricing
This study has concluded that with respect to domestic
pr ices all the major produc ing nat ions have 1 i st pr ices tha t
.-.- .
could be characterized as .administered.~ However, the domestic
transactions prices have moved in a cyclical manner in all of.
the nations studied. Thus, with respect to domestic cyclical
pricing, one finds that the pricing policies of the steel
industries in the major producing nations are similar: actual
prices are responsive to demand while list prices are not. 71/
Comparisons of Domestic Prices '
Table 4.18 presents data on the domestic prices of bars,
plates, and cold rolled sheets in the U.S., EC, and Japan. 72/
Throughout the 1960' s the prices were highest in the United
States. From 1968 unti 1 1972, the Japanese pr ices were the
71/ It should be emphasized that cyclically flexible pricing
does not necessarily ,imply competitive pricing, since profit
maximizing pricing bY'monopolists and oligopolists will
generally lead to flexible pricing. For theoretical and
empirical discussions of this matter see, respectively, (26,
p. 305) and P. David Qualls, "Market Structure and Price-Cost
Margin Flexibility in American Manufacturing, 1958-70,.
Bureau of Economics Work~g Paper Number 1, WaShington, D.C.:
Federal Trade Commission, 1977.
72/ All of these prices, except the Japanese for the 1970's, Me unit values; Le.,1 they are the average values of all
actual transactions in the product line for the years.

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