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An Empirical Analysis of the Effects of OEM Agreements Between Competitors

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  • Shintaro Minamoto

    (Graduate School of Economics, The University of Osaka)

Abstract

Original equipment manufacturing (OEM) agreements between competing firms play a significant role in improving production efficiency through scale economies. At the same time, however, they can also reduce market competition. This study empirically examines the effects of OEM agreements on competition and welfare in the Japanese automobile industry. I develop and estimate structural models incorporating OEM agreements, market competition, and scale economies. The results indicate that efficiency improvements lead to significant welfare gains, even when these agreements reduce competition. These findings provide empirical insights into the trade-off involved in such agreements and contribute to competition policy regarding modern supply chains.

Suggested Citation

  • Shintaro Minamoto, 2026. "An Empirical Analysis of the Effects of OEM Agreements Between Competitors," Discussion Papers in Economics and Business 26-07, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:2607
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    References listed on IDEAS

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    3. Armstrong, Mark & Porter, Robert, 2007. "Preface to the Handbook of Industrial Organization, Volume 3," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 0, pages 00, Elsevier.
    4. Mark Armstrong & Robert Porter (ed.), 2007. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 3, number 1.
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    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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