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

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  • Larry D. Qiu
  • Barbara J. Spencer

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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Bibliographic Info

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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Handle: RePEc:nbr:nberwo:8279

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  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.
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  16. Barbara J. Spencer & Larry D. Qiu, 2000. "Keiretsu and Relationship-Specific Investment: A Barrier to Trade?," NBER Working Papers 7572, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  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.
  2. 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.
  3. Barbara J. Spencer & Larry D. Qiu, 2000. "Keiretsu and Relationship-Specific Investment: A Barrier to Trade?," NBER Working Papers 7572, National Bureau of Economic Research, Inc.
  4. Swenson, Deborah L., 2005. "Overseas assembly and country sourcing choices," Journal of International Economics, Elsevier, vol. 66(1), pages 107-130, May.
  5. Jota Ishikawa & Yoichi Sugita & Laixun Zhao, 2008. "Commercial Policy and Foreign Ownership," Global COE Hi-Stat Discussion Paper Series gd08-005, Institute of Economic Research, Hitotsubashi University.
  6. José De Sousa & Xavier Fairise, 2010. "Do we need handshakes to cooperate in buyer-supplier relationships?," Working Papers SMART - LERECO 201013, INRA UMR SMART.
  7. José De Sousa & Xavier Fairise, 2013. "On the value of partial commitment for cooperative investment in buyer-supplier relationship," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00870060, HAL.
  8. Pol Antràs, 2011. "Grossman-Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production," NBER Working Papers 17470, National Bureau of Economic Research, Inc.
  9. José De Sousa & Xavier Fairise, 2013. "On the value of partial commitment for cooperative investment in buyer-supplier relationship," Working Papers halshs-00870060, HAL.
  10. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
  11. 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.
  12. Ursino, Giovanni, 2009. "Supply Chain Control: A Theory of Vertical Integration," MPRA Paper 18357, University Library of Munich, Germany.

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