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Windfall Profits and Vertical Relationships: Who Gained in the Japanese Auto Industry from VERs?

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  • Ries, John C

Abstract

This paper employs an event study to analyze the effect of the 1981 voluntary export restraint agreements on profits in the Japanese automobile industry. Stock price movements of seven Japanese automakers and sixty-nine of their suppliers are examined. The results indicate that the profits of Japan's producers of passenger cars rose as a result of the voluntary export restraints, while only some suppliers, large ones and those producing specialized parts or services, appear to have shared the benefits. Voluntary export restraints increased profits for some firms in the Japanese auto industry but many suppliers did not share the windfall. Copyright 1993 by Blackwell Publishing Ltd.

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  • Ries, John C, 1993. "Windfall Profits and Vertical Relationships: Who Gained in the Japanese Auto Industry from VERs?," Journal of Industrial Economics, Wiley Blackwell, vol. 41(3), pages 259-276, September.
  • Handle: RePEc:bla:jindec:v:41:y:1993:i:3:p:259-76
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    Cited by:

    1. Greaney, Theresa M., 1996. "Import now! An analysis of market-share voluntary import expansions (VIEs)," Journal of International Economics, Elsevier, pages 149-163.
    2. Tain-Jy Chen & Meng-chun Liu, 1995. "Bilateral Negotiations and Multilateral Trade: The Case of Taiwan-U.S. Trade Talks," NBER Working Papers 5324, National Bureau of Economic Research, Inc.
    3. Bruce A. Blonigen & KaSaundra Tomlin & Wesley W. Wilson, 2001. "Tariff-jumping FDI and Domestic Firms’ Profits," University of Oregon Economics Department Working Papers 2002-5, University of Oregon Economics Department, revised 01 Jun 2002.
    4. Bown, Chad P. & Crowley, Meredith A, 2016. "The Empirical Landscape of Trade Policy," CEPR Discussion Papers 11216, C.E.P.R. Discussion Papers.
    5. Ronald B. Davies & Zuzanna Studnicka, 2017. "The Heterogeneous Impact of Brexit: Early Indications from the FTSE," Working Papers 201708, School of Economics, University College Dublin.
    6. Benjamin H. Liebman & Kasaundra M. Tomlin, 2008. "Safeguards and Retaliatory Threats," Journal of Law and Economics, University of Chicago Press, vol. 51(2), pages 351-376, May.
    7. Bruce Blonigen & KaSaundra Tomlin & Wesley Wilson, 2004. "Tariff-jumping FDI and domestic firms' profits," Canadian Journal of Economics, Canadian Economics Association, vol. 37(3), pages 656-677, August.
    8. Isabel Ruiz & Susan Pozo, 2008. "Exchange rates and US direct investment into Latin America," The Journal of International Trade & Economic Development, Taylor & Francis Journals, pages 411-438.
    9. Boardman, Anthony & Vertinsky, Ilan & Whistler, Diana, 1997. "Using information diffusion models to estimate the impacts of regulatory events on publicly traded firms," Journal of Public Economics, Elsevier, pages 283-300.
    10. Qiu, Larry D. & Spencer, Barbara J., 2002. "Keiretsu and relationship-specific investment: implications for market-opening trade policy," Journal of International Economics, Elsevier, pages 49-79.
    11. Marco Bernardini & Selien De Schryder & Gert Peersman, 2017. "Heterogeneous Government Spending Multipliers In The Era Surrounding The Great Recession," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 17/941, Ghent University, Faculty of Economics and Business Administration.
    12. Qiu, Larry D. & Spencer, Barbara J., 2002. "Keiretsu and relationship-specific investment: implications for market-opening trade policy," Journal of International Economics, Elsevier, pages 49-79.
    13. Keith Head & Barbara J. Spencer, 2017. "Oligopoly in International Trade: Rise, Fall and Resurgence," NBER Working Papers 23720, National Bureau of Economic Research, Inc.
    14. Benjamin Liebman & Kasaundra Tomlin, 2015. "World Trade Organization sanctions, implementation, and retaliation," Empirical Economics, Springer, pages 715-745.
    15. Ronald B. Davies & Julien Martin & Mathieu Parenti & Farid Toubal, 2014. "Knocking on Tax Haven's Door: Multinational Firms and Transfer Pricing," CESifo Working Paper Series 5132, CESifo Group Munich.
    16. Tain-Jy Chen & Meng-Chun Liu, 1997. "Bilateral Negotiations and Multilateral Trade: The Case of Taiwan - U.S. Trade Talks," NBER Chapters,in: Regionalism versus Multilateral Trade Arrangements, NBER-EASE Volume 6, pages 345-370 National Bureau of Economic Research, Inc.
    17. Zhou, Dongsheng & Vertinsky, Ilan, 2002. "Can protectionist trade measures make a country better off? A study of VERs and minimum quality standards," Journal of Business Research, Elsevier, pages 227-236.
    18. Ronald B. Davies & Benjamin H. Liebman & Kasaundra Tomlin, 2015. "I've Been Everywhere (Except Mexico): Investor Responses to NAFTA's Cross-Border Trucking Provisions," The Institute for International Integration Studies Discussion Paper Series iiisdp467, IIIS.

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