Partial ownership arrangements in the Japanese automobile industry; 1990-2000
The end of the 1990’s saw a number of foreign automobile manufacturers become the largest shareholders in several Japanese automobile manufacturers. It seems logical to conclude that a firm only enters into a partial ownership arrangement (POA) if it is profit maximizing. However, research to date has treated POAs as if exogenous to the model. This paper develops a model that assumes POAs are determined endogenously. Data for the Japanese automobile industry are then used to investigate the factors that determine whether a firm enters into a POA, and the effects a POA has on the price-cost margin. The findings of this paper suggest that while both foreign and domestic firms take an interest in product mix when exploring POAs in the Japanese market, they have differing profit incentives. Furthermore, the level of ownership has a positive effect on POAs.
Volume (Year): 7 (2004)
Issue (Month): (November)
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- Larry D. Qiu & Barbara J. Spencer, 2001.
"Keiretsu and Relationship-Specific Investment: Implications for Market-Opening Trade Policy,"
NBER Working Papers
8279, National Bureau of Economic Research, Inc.
- Qiu, Larry D. & Spencer, Barbara J., 2002. "Keiretsu and relationship-specific investment: implications for market-opening trade policy," Journal of International Economics, Elsevier, vol. 58(1), pages 49-79, October.
- Clarke, Roger & Davies, Stephen & Waterson, Michael, 1984. "The Profitability-Concentration Relation: Market Power or Efficiency?," Journal of Industrial Economics, Wiley Blackwell, vol. 32(4), pages 435-50, June.
- Alley, Wilson A, 1997. "Partial Ownership Arrangements and Collusion in the Automobile Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 45(2), pages 191-205, June.
- Yamawaki, Hideki, 1989. "A Comparative Analysis of Intertemporal Behavior of Profits: Japan and the United States," Journal of Industrial Economics, Wiley Blackwell, vol. 37(4), pages 389-409, June.
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