Organizational Entry Deterrence Barrier:The Japanese Firm vs.the American Firm
AbstractWe formulate a three-stage game in which a Japanese firm as a generalized labor-managed firm and an American firm as a profit-maximizing firm compete in the homogeneous product market. In the first stage of the game, both the firms decide whether they enter the market or not. In the second stage, they invest capital stocks. In the third stage, they play a Nash-Cournot quantity game. We show that the Japanese firm employs more capital and produces more than does the American firm. By intentionally raising its fixed cost, the Japanese firm can survive in the market even though the American firm exits. Based on the difference in firm objectives, the Japanese firm builds an organizational deterrence barrier against the American firm through its high fixed cost. We give a rationale for long-term transactions between Japanese firms.
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Bibliographic InfoPaper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 23.
Length: 21 pages
Date of creation: Jan 2005
Date of revision: Jan 2005
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Generalized Labor-Managed Firm; Profit-Maximizing Firm; Organizational Entry Deterrence;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
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