TY  - JOUR
AU  - Feenstra,Robert C.
AU  - Huang,Deng-Shing
AU  - Hamilton,Gary G.
TI  - Business Groups and Trade in East Asia: Part 1, Networked Equilibria
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5886
PY  - 1997
Y2  - January 1997
UR  - http://www.nber.org/papers/w5886
L1  - http://www.nber.org/papers/w5886.pdf
N1  - Author contact info:
Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA  95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu

Deng-Shing Huang
The Institute of Economics
Academia Sinica
Nankang, Taipei, Taiwan (115)
Republic of China
E-Mail: dhuang@econ.sinica.edu.tw
AB  - We propose an economic model of business groups that allows for the cooperative behavior of groups of firms, where the number and size of each group is determined endogenously.  In this framework, more than one configuration of groups can arise in equilibrium: several different types of business groups can occur, each of which is consistent with profit-maximization and is stable.  This means that the economic logic does not fully determine the industrial structure, leaving scope for political and sociological factors to have a lasting influence.  In a companion paper, we argue that the differing structures of business groups found in South Korea, Taiwan and Japan fit the stylized results from the model, and contrast the impact of these groups on the product variety of their country exports to the United States.
ER  -