Vertical Networks and U.S. Auto Parts Exports: Is Japan Different?

31 Pages Posted: 2 Jun 2004

See all articles by Keith Head

Keith Head

University of British Columbia (UBC) - Sauder School of Business

John C. Ries

University of British Columbia (UBC) - Sauder School of Business; University of British Columbia (UBC) - SFU-UBC Centre for the Study of Government and Business

Barbara J. Spencer

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

Abstract

In a model where upstream network insiders conduct relationship-specific investment, downstream firms have an incentive to transact within networks. Evidence from U.S. auto parts exports to 26 auto-producing countries supports key predictions of the model. Greater production scale for assemblers lowers imported parts per car. Vertical networks matter in two ways. First, although Japan's average import levels are not unusually low, non-Japanese suppliers have relatively low market penetration for parts categories where vertical keiretsu are prominent in Japan. Second, U.S.-owned assembly abroad and foreign-owned parts production in the U.S. both stimulate parts exports.

Suggested Citation

Head, Keith Charles and Ries, John C. and Spencer, Barbara J., Vertical Networks and U.S. Auto Parts Exports: Is Japan Different?. Journal of Economics & Management Strategy, Vol. 13, No. 1, pp. 37-67, March 2004. Available at SSRN: https://ssrn.com/abstract=528388

Keith Charles Head (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8492 (Phone)
604-822-8477 (Fax)

John C. Ries

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

University of British Columbia (UBC) - SFU-UBC Centre for the Study of Government and Business ( email )

2053 Main Mall
Vancouver, British Columbia V6T 1Z2
Canada
604-822-8493 (Phone)
604-822-8477 (Fax)

Barbara J. Spencer

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

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