Keiretsu and Relationship-Specific Investment: A Barrier to Trade? / Barbara J. Spencer, Larry D. Qiu.

Format:

Book

Author/Creator:

Spencer, Barbara J.

Contributor:

National Bureau of Economic Research.

Qiu, Larry D.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7572.

NBER working paper series no. w7572

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Keiretsu and Relationship-Specific Investment

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2000.

Summary:

This paper develops a model of informal procurement within Japanese keiretsu so as to consider effects on intermediate-good imports, such as auto parts. Parts-suppliers make relationship-specific investments that benefit the auto-maker and prices are determined by bargaining after investment has been sunk. Although this investment raises efficiency, it limits the range of imports to less important parts such as tail pipes and it is possible that no parts are imported, despite lower foreign production costs. Lack of information concerning investment rents combined with counterintuitive effects on imports and Japanese production costs could create unwarranted perceptions of a trade barrier.

Notes:

Print version record

February 2000.