NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Keiretsu and Relationship-Specific Investment: Implications for Market-Opening Trade Policy

Larry D. Qiu, Barbara J. Spencer

NBER Working Paper No. 8279
Issued in May 2001
NBER Program(s):   ITI

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.

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Document Object Identifier (DOI): 10.3386/w8279

Published: Qiu, Larry D. and Barbara J. Spencer. "Keiretsu And Relationship-Specific Investment: Implications For Market-Opening Trade Policy," Journal of International Economics, 2002, v57(1,Oct), 49-79. citation courtesy of

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