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 language | English |
|---|---|
| Pages (from-to) | 49-79 |
| Number of pages | 40 |
| Journal | Journal of International Economics |
| Volume | 58 |
| Issue number | 1 |
| Early online date | 21 Nov 2001 |
| DOIs | |
| Publication status | Published - Oct 2002 |
| Externally published | Yes |
Bibliographical note
This paper has benefited from presentation at Columbia University (Economics), New York University (Economics) and at the University of British Columbia (Commerce). We thank the participants and also an anonymous referee for helpful suggestions and comments. An earlier version of this paper was titled, ‘Keiretsu and Relational Quasi Rents: Implications for VIEs and VERs’.Funding
Financial support was provided by the Social Sciences and Humanities Research Council of Canada.