Book Reviews

Yasuhiro Sakai & Keisuke
Sasaki, Information andDistribution: The Roleof Merchants in theMarket Economy Under
Uncertainty

Yasunori Yoshizawa

Associate Professor /Nagasaki University

Springer, 2021, 221pp.
The world is full of uncertainties. Take forexample the problem of deciding on a restaurant for the evening when we have no idea if
the restaurant is good or bad, or how much themeal will cost. We can find this information
when we enter the restaurant, but will certainly
be disappointed if the restaurant is bad orcharges too much. To avoid such disappointment, it seems best if we gather information
about the restaurant beforehand, consider ourown tastes and willingness to pay, and then decide whether to eat and drink at the restaurant.
Nowadays, restaurant information is available
on gourmet websites, and many restaurants
themselves display their pricing at the entrance.
This is how we acquire information about therestaurants where we want to dine and decide
whether or not to go.
The above example demonstrates how information acquisition can alleviate theinformation asymmetry between consumers
and producers. It also raises the question as towhether the elimination of information asymmetry is always a good thing. Proverbs quoted
in this book state that “knowledge is power”
and “two heads are better than one,” which aregood for eliminating information asymmetries.
But another proverb state that “ignorance isbliss” and “what the eye doesn’t see, the heart

doesn’t grieve,” which can be a bad thing. So,
which is it really? Of course, we must be thinking that the elimination of information
asymmetry is either good or bad depending on
the situation.
This book, written by Yasuhiro Sakai, professor emeritus of Shiga University, and Keisuke
Sasaki, professor of Toyo University, gathers
nine articles by Sakai and Sasaki, revised fromtheir previous works to answer the questions
posed in the previous section. Part I, “Merchants: Historical Perspective,” contains two
articles: a revised paper published in the AsiaPacific Journal of Regional Science and a
research paper presented at an international
workshop on regional economics at the University of Tsukuba in January 2019. Part II,“Information Exchange: Theoretical Perspective,” collects five articles: a revised paper
published in Organization, Performance andEquity; three papers based on a discussion paper presented at the University of Tsukuba;
and a paper published in the Journal of Managerial and Economic Studies in 1993.1) Part III,
“Risk Aversion: Mathematical Perspective,” offers two articles from a revised a paper
published in the Hikone Ronso and the Journalof Economics.

1) Chapter 7 states at the beginning that “this paper isthe latest revised version of Sakai (1995)”, but there is noentr y f or Sa k a i (1995) i n t he bibl iog raphy. A f ter
checking the contents, the reviewer can only surmisethat this entry is Sakai (1993), “The Role of Informationin Profit-Maximizing and Labor-Managed Duopoly
Models,” Managerial and Decision Economics.

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Chapter 1 contrasts the Liverpool merchantswith the Omi merchants, especially in terms ofrisk management methods in trade. Chapter 2
focuses on Sombart’s work and discusses therole of merchants in the exchange economy
from an history of economic thought perspective. The reviewer is not an expert in tradetheory, insurance theory, or history of economic thought, and as such will refrain from
evaluating these chapters; but the reviewer
would like to point out that the Omi merchants’ management philosophy of “three-wayadvantage,” or “being good for the buyer, goodfor the seller, and good for the society,” is mentioned not only in these chapters but also inother parts of the book. It is analogous towhether or not consumer surplus, producer
surplus, and total surplus can be improved byeliminating information asymmetries.
As the main part of the book, Part II discusses the existence of distributors in imperfectlycompetitive markets as well as changes in surpluses resulting from the elimination ofinformation asymmetries.
Part III discusses changes in expected profits
with eliminating information asymmetries
when firms competing in duopoly markets arerisk averse.
There are two features of this book. The first
feature is that substitutability and complementarity are considered for goods. Readers who areused to game-theory based arguments that relyon strategic substitutability and complementarity will be aware of this. The second feature isPart III deals with how firms that are risk
averse acts. Although there is an abundance ofliterature on the effects of resolving information asymmetries on profits and surpluses,
most of the literature assumes that firms arerisk neutral, and relatively few discuss cases involving risk aversion, as this book does. This
book is recommended for readers who want tolearn about such cases.
On the other hand, one disappointing aspectof this book is the slight discrepancy between
its title and the contents. Although the book’s
subtitle is “The Role of Merchants in the Market Economy Under Uncertainty,” merchants
and intermediary distributors appear explicitly
only in the first three chapters. The remainderof the book is concerned mainly about whether or not information sharing in oligopoly
models can improve surpluses, and there are nointermediate distributors in these models. The
role of intermediary distributors has been analyzed theoretically in the monopoly model, but
not in the duopoly and oligopoly models.
Except for Chapter 7, the book presents noreal mathematical challenges, so even underg raduates who have studie d e conomic
mathematics, microeconomics, and game theory should be able to follow the arguments.
Being a revision of previously published articles, the book contains several typographicalerrors in terms of symbols and a number ofequations. Rooting out these errors mightprove an enjoyable exercise.
The reviewer’s own master’s thesis made useof the Sakai book as a reference. The argumentof the book was based on a simple and easy tounderstand model, as appears in this book.
Reading the book is recommended for anyone
who, like the reviewer in the past, would like to
study how the elimination of information
asymmetries can affect surpluses.

Yasuhiro Sakai & Keisuke Sasaki, Information and Distribution:
The Role of Merchants in the Market Economy Under Uncertainty

Yasunori Yoshizawa

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