Windfall Profits and Vertical Relationships: Who Gained in the Japanese Auto Industry from VERs?

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49 citations0/0 files storedJournal of Industrial Economics

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Global trade and economics Historical Economic and Social Studies Merger and Competition Analysis

Abstract

This paper employs an event study to analyze the effect of the 1981 voluntary export restraint agreements on profits in the Japanese automobile industry. Stock price movements of seven Japanese automakers and sixty-nine of their suppliers are examined. The results indicate that the profits of Japan's producers of passenger cars rose as a result of the voluntary export restraints, while only some suppliers, large ones and those producing specialized parts or services, appear to have shared the benefits. Voluntary export restraints increased profits for some firms in the Japanese auto industry but many suppliers did not share the windfall. Copyright 1993 by Blackwell Publishing Ltd.

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References

1976Markets and Hierarchies: Analysis and Antitrust Implications.1978Vertical Integration, Appropriable Rents, and the Competitive Contracting Process 1988Information, Incentives and Bargaining in the Japanese Economy 1982Supplier Switching Costs and Vertical Integration in the Automobile Industry 1989Manufacturer-supplier relationships in Japan and the concept of relation-specific skill 1985Why Voluntary Export Restraints Are 'Voluntary'1988Quality Change Under Trade Restraints in Japanese Autos 1976The use of dummy variables to compute predictions, prediction errors, and confidence intervals

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