Abstract

http://ssrn.com/abstract=216728
 
 

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Keiretsu and Relationship-Specific Investment: A Barrier to Trade?


Barbara J. Spencer


University of British Columbia (UBC) - Sauder School of Business; National Bureau of Economic Research (NBER)

Larry D. Qiu


Hong Kong University of Science & Technology - Department of Economics

February 2000

NBER Working Paper No. w7572

Abstract:     
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.

Number of Pages in PDF File: 43

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Date posted: March 22, 2000  

Suggested Citation

Spencer, Barbara J. and Qiu, Larry D., Keiretsu and Relationship-Specific Investment: A Barrier to Trade? (February 2000). NBER Working Paper No. w7572. Available at SSRN: http://ssrn.com/abstract=216728

Contact Information

Barbara J. Spencer (Contact Author)
University of British Columbia (UBC) - Sauder School of Business ( email )
2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8479 (Phone)
604-822-8477 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Larry Dongxiao Qiu
Hong Kong University of Science & Technology - Department of Economics ( email )
Clear Water Bay
Kowloon, Hong Kong
China
HOME PAGE: http://www.bm.ust.hk/~larryqiu/
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References:  31
Citations:  10
Footnotes:  48

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