Keiretsu and relationship-specific investment : implications for market-opening policy

Larry D. QIU, Barbara J. SPENCER

Research output: Journal PublicationsJournal Article (refereed)

25 Citations (Scopus)

Abstract

This paper considers the implications of relationship-specific investment within keiretsu for policies aimed at opening the Japanese market for intermediate goods, such as auto parts. Both VIEs applied to parts and VERs restricting Japanese exports of autos cause the keiretsu to import a wider range of parts, but of a relatively unimportant type, such as seat covers. Since keiretsu investment and output fall, the total value of U.S. parts exports may actually fall. For a given value of these exports, a VIE is less costly for U.S. consumers and Japanese producers, but a VER is preferred by U.S. automakers.
Original languageEnglish
Pages (from-to)49-79
Number of pages40
JournalJournal of International Economics
Volume58
Issue number1
Early online date21 Nov 2001
DOIs
Publication statusPublished - Oct 2002
Externally publishedYes

Bibliographical note

This paper has benefited from presentation at Columbia University (Economics), New York University (Economics) and at the University of British Columbia (Commerce). An earlier version of this paper was titled, ‘Keiretsu and Relational Quasi Rents: Implications for VIEs and VERs’. Financial support was provided by the Social Sciences and Humanities Research Council of Canada.

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