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Integrated Strategy and International Trade Disputes: The Kodak-Fujifilm Case

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  • David P. Baron

Abstract

This paper examines the integration of market and nonmarket strategies in a setting involving market competition and international trade policy where governments serve as bargaining agents for firms. In the case modeled, the Eastman Kodak Company (Kodak) filed a Section 301 petition under US trade law against practices of Fuji Photo Film Company (Fujifilm) in the Japanese distribution system that Kodak alleges constitute trade barriers. The model has four components. The market model characterizes the competition between Fujifilm and Kodak, incorporating characteristics descriptive of the demand and market structure in Japan. Enforcement of an international trade agreement focusing on practices in a distribution system are problematic, so the second model characterizes the sustainability of concessions obtained through a trade agreement using a repeated game extension of the market model. The third model characterizes the bargaining between the US and Japanese governments using the preferences induced by the market model and the limits on sustainable concessions characterized in the second model. Using a common-agency framework, the fourth model represents the nonmarket competition between the two firms as they work to influence the bargaining positions of the governments. The result is a model in which market and nonmarket strategies are integrated in a formal theory of the resolution of trade disputes and the subsequent effects on market competition. The equilibrium characterized allows a comparative statics analysis of the synergies between market and nonmarket strategies. Copyright (c) 1997 Massachusetts Institute of Technology.

Suggested Citation

  • David P. Baron, 1997. "Integrated Strategy and International Trade Disputes: The Kodak-Fujifilm Case," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 291-346, June.
  • Handle: RePEc:bla:jemstr:v:6:y:1997:i:1:p:291-346
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    1. repec:bla:stratm:v:38:y:2017:i:2:p:203-231 is not listed on IDEAS
    2. Sara Fisher Ellison & Catherine Wolfram, 2001. "Pharmaceutical Prices and Political Activity," NBER Working Papers 8482, National Bureau of Economic Research, Inc.
    3. Usero Sánchez, María Belén & Fernández, Zulima, 2005. "First come, first served: an analysis of pioneer and follower firms' market and nonmarket actions in the European mobile telephone industry," DEE - Working Papers. Business Economics. WB wb054812, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    4. repec:ibn:ibrjnl:v:11:y:2018:i:1:p:1-18 is not listed on IDEAS
    5. John M. de Figueiredo & Emerson H. Tiller, 2000. "The Structure and Conduct of Corporate Lobbying: How Firms Lobby the Federal Communications Commission," NBER Working Papers 7726, National Bureau of Economic Research, Inc.
    6. repec:spr:jbecon:v:88:y:2018:i:2:d:10.1007_s11573-017-0875-3 is not listed on IDEAS
    7. Chen, Yi-Min & Liu, Hsin-Hsien & Wu, Hsin-Yi, 2016. "Reputation for toughness and anti-dumping rebuttals: Competitive rivalry, perceived benefits, and stage of the product life cycle," Journal of Business Research, Elsevier, vol. 69(6), pages 2145-2150.
    8. Sara Fisher Ellison & Catherine Wolfram, 2004. "Coordinating on Lower Prices: Pharmaceutical Pricing Under Political Pressure," Economics Working Papers 0048, Institute for Advanced Study, School of Social Science.

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