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Network Effects on Trade in Intermediate Goods: Evidence from the Automobile Industry

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  • Shuhei Nishitateno

Abstract

Growing production fragmentation makes analysis of network effects on trade in parts and components more important than ever. This study examines network effects on auto parts exports from six major auto producing countries using a panel dataset covering 49 destinations and 31 products over the period from 2002 to 2008. Unlike previous research, this study finds that, in the case of Japanese automakers, overseas production by subsidiary plants is less important in determining auto parts exports from Japan than it is for the other major auto producing countries. Japanese auto parts suppliers, unlike their counterparts in other countries, have a tendency to follow the Japanese auto makers in internationalizing their operations. This practice of meeting the need of automakers from overseas production plants weakens the network effects on auto parts exports from Japan.

Suggested Citation

  • Shuhei Nishitateno, 2014. "Network Effects on Trade in Intermediate Goods: Evidence from the Automobile Industry," Departmental Working Papers 2014-09, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2014-09
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    References listed on IDEAS

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    Cited by:

    1. repec:ers:journl:v:xxii:y:2019:i:2:p:265-281 is not listed on IDEAS
    2. INUI Tomohiko & KODAMA Naomi, 2016. "The Effects of Japanese Customer Firms' Overseas Outsourcing on Supplier Firms' Performance," Discussion papers 16106, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    Keywords

    Network effect; International trade; production fragmentation; keiretsu; automobile industry; Japan;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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