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Keiretsu and Relationship-Specific Investment: Implications for Market-Opening Trade Policy

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Author Info
Larry D. Qiu
Barbara J. Spencer

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Abstract

This paper considers the implications of relationship-specific investment within keiretsu for policies aimed at opening the Japanese market for intermediate goods, such as auto parts. Both VIEs applied to parts and VERs restricting Japanese exports of autos cause the keiretsu to import a wider range of parts, but of a relatively unimportant type, such as seat covers. Since keiretsu investment and output fall, the total value of U.S. parts exports may actually fall. For a given value of these exports, a VIE is less costly for U.S. consumers and Japanese producers, but a VER is preferred by U.S. automakers.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8279.

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Date of creation: May 2001
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Publication status: published as Qiu, Larry D. and Barbara J. Spencer. "Keiretsu And Relationship-Specific Investment: Implications For Market-Opening Trade Policy," Journal of International Economics, 2002, v57(1,Oct), 49-79.
Handle: RePEc:nbr:nberwo:8279

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Greaney, Theresa M., 1996. "Import now! An analysis of market-share voluntary import expansions (VIEs)," Journal of International Economics, Elsevier, vol. 40(1-2), pages 149-163, February. [Downloadable!] (restricted)
  2. Branstetter, Lee, 2000. "Vertical Keiretsu and Knowledge Spillovers in Japanese Manufacturing: An Empirical Assessment," Journal of the Japanese and International Economies, Elsevier, vol. 14(2), pages 73-104, June. [Downloadable!] (restricted)
  3. John McMillan, 1993. "Why Does Japan Resist Foreign Market Opening Pressure?," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH.
  4. Neil Bjorksten, 1994. "Voluntary Import Expansions and Voluntary Export Restraints in an Oligopoly Model with Capacity Constraints," Canadian Journal of Economics, Canadian Economics Association, vol. 27(2), pages 446-57, May. [Downloadable!] (restricted)
  5. Head, Keith & Ries, John & Swenson, Deborah, 1995. "Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States," Journal of International Economics, Elsevier, vol. 38(3-4), pages 223-247, May. [Downloadable!] (restricted)
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  6. Krishna, Kala & Morgan, John, 1998. "Implementing results-oriented trade policies: The case of the US-Japanese auto parts dispute," European Economic Review, Elsevier, vol. 42(8), pages 1443-1467, September. [Downloadable!] (restricted)
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  7. McLaren, John, 1999. "Supplier relations and the market context: A theory of handshakes," Journal of International Economics, Elsevier, vol. 48(1), pages 121-138, June. [Downloadable!] (restricted)
  8. Krishna, Kala, 1989. "Trade restrictions as facilitating practices," Journal of International Economics, Elsevier, vol. 26(3-4), pages 251-270, May. [Downloadable!] (restricted)
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  9. Asanuma, Banri, 1989. "Manufacturer-supplier relationships in Japan and the concept of relation-specific skill," Journal of the Japanese and International Economies, Elsevier, vol. 3(1), pages 1-30, March. [Downloadable!] (restricted)
  10. Spencer, Barbara J & Qiu, Larry D, 2001. "Keiretsu and Relationship-Specific Investment: A Barrier to Trade?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 871-901, November.
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  11. Krishna, Kala & Roy, Suddhasatwa & Thursby, Marie, 1998. "Implementing Market Access," Review of International Economics, Blackwell Publishing, vol. 6(4), pages 529-44, November.
    Other versions:
    • Krishna, K & Thursby, M & Roy, S, 1996. "Implementing Market Access," Papers 96-011, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
    • Krishna, K & Roy, S & Thursby, M, 1996. "Implementaing Market Access," Papers 96-003, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
    • Kala Krishna & Suddhasatwa Roy & Marie Thursby, 1996. "Implementing Market Access," NBER Working Papers 5593, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Kala Krishna & Suddhasatwa Roy & Marie C. Thursby, 2000. "Can Subsidies for MARs be Procompetitive?," NBER Working Papers 7624, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Keith Head & John Ries & Barbara J. Spencer, 2002. "Vertical Networks and US Auto Parts Exports: Is Japan Different?," NBER Working Papers 9162, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Hiroshi Ono & Takuya Nakazato & Colin Davis & Wilson Alley, 2004. "Partial ownership arrangements in the Japanese automobile industry; 1990-2000," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 355-367, November. [Downloadable!]
  3. Robert C. Feenstra & Barbara J. Spencer, 2005. "Contractual Versus Generic Outsourcing: The Role of Proximity," NBER Working Papers 11885, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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