Japan's Corporate Groups: Collusive or Competitive? An Empirical Investigation of Keiretsu Behavior

Weinstein, David E.; Yafeh, Yishay

doi:10.2307/2950549

Cited by 166 publications

(80 citation statements)

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“…For FDI, however, Lawrence (1993) fails to find such a correlation. Contrary to the view that Japanese keiretsu firms collude to exclude foreign firms, some including Weinstein and Yafeh (1995) argue that Japanese keiretsu groups may compete among themselves so fiercely to reduce the profit margin of foreign firms so much that they do not find it attractive to enter. They find that the industries that have high shares of keiretsu firms tend to have low profit margins.…”

Section: Determinants Of Fdimentioning

confidence: 79%

Has Abenomics Succeeded in Raising Japan's Inward Foreign Direct Investment?

Hoshi

2018

Asian Economic Policy Review

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Japan is known to have an exceptionally low level of inward foreign direct investment (FDI). The promotion of inward FDI is one of the policy goals of Abenomics structural reforms. This present paper studies the accumulation of Japan's inward FDI stock during the first 3 years of Abenomics (2012Abenomics ( -2015, and finds no evidence that Japan's inward FDI stock increased more than the trend before Abenomics started would have predicted. A comparison of the main policies for promoting inward FDI that have been implemented to the real and perceived impediments to inward FDI reveals that it may be advisable to shift the emphasis of the policy to address more regulatory and administrative issues and to reduce the cost of doing business in Japan.

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Section: Determinants Of Fdimentioning

confidence: 79%

Has Abenomics Succeeded in Raising Japan's Inward Foreign Direct Investment?

Hoshi

2018

Asian Economic Policy Review

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“…Unlike Japan, where commercial banks as private institutions may have pushed their borrowers to expand output beyond purely profit maximizing levels (cf., Weinstein and Yafeh 1995), the bankers and government were essentially the same unit. As Amsden rents."…”

Section: The Role Of Policy Loans In Increasing Market Concentrationmentioning

confidence: 99%

“…And there was a quid pro quo needed to continue with these valuable subsidies in the future: capital base expansion for export expansion relative to the industry as a whole. In the same fashion that Weinstein and Yafeh (1995) argue that bankers could induce output expansion relative to present value maximizing levels in Japan, this quid pro quo would induce greater output levels for target firms than they would have selected but for their incentive to keep in the good graces of the government to continue receiving these subsidies. 25 Third, not only were funds 13 26 " Especially through being able to influence... details of particular loans, industrial development officials have... a range of detailed instruments able to discriminate between individual firms" (Amsden 1996).…”

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confidence: 99%

A new methodology linking concentration dynamics to current and steady-state profits:Examining Korean industrial policy during take-off

Jeong¹,

Masson²

2003

International Journal of Industrial Organization

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We model the dynamics of industrial structure and market power using Korean manufacturing data during the take-off period . StructureYConductYPerformance [SCP] methodologies have been criticized for using accounting data and because a few superior firms may have greater shares and greater profits. Both are argued to present possible spurious correlations between concentration and profits. This paper follows earlier work which shows that market structure responds to observed accounting profits as if these were accurate indices of real profits, and not as if leading firms are perceived to have unmatchable advantages.The methodological contribution of this model is a new latent variable for steady state profits derived from the speed of structural adjustment. Long run profits are identified by the hypothesis that structural adjustment will be more rapid when industries are farther from steady state levels. We analyze the long run profits latent variable, finding strong support for this hypothesis. The speed of adjustment is greater for positive and negative deviations from steady state structure. We show that the profits and structural adjustment relationship is non-monotone. The SCP criticisms above are based on spurious correlations which are monotone in profits and structure. Positing spurious correlations which are at the same time monotone in structure and non-monotone in structural adjustment seems less plausible than accepting the SCP results which are consistent with both.Our analysis also is new in that it is the first direct econometric analysis of Korean industrial policy during its take-off years. We note that in Korea, unlike elsewhere, Industrial Policy was hypothesized to lead to concentration and market power in the popular press and by professional economists. Ours is the first direct econometric analysis of this hypothesis, and we find it supported. Journal of Economic Literature Classifications:Primary: L11 Secondary L52, O10, O53

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“…However, this does not necessarily mean that profits are increased for the groups. For Japan, studies including Caves and Uekusa (1976) and Weinstein and Yafeh (1995) find that the firms affiliated with groups in Japan are not more profitable than unaffiliated firms. Khanna and Rivkin (2001) use a broader cross-country study and find that group membership raises profits in six countries and lowers it in five, though capital market imperfections are not correlated with the performance of groups.…”

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confidence: 99%

A market-power based model of business groups

Feenstra

Huang

Hamilton

2003

Journal of Economic Behavior & Organization

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We propose an model of vertically and horizontally-integrated business groups that allows the number and size of each group to be determined endogenously. We find that more than one configuration of groups that can arise in equilibrium: several different types of business groups can occur, each of which are consistent with profit-maximization and are stable. We suggest that the strongly-integrated groups arising in the model characterize the chaebol found in South Korea, whereas the less-integrated groups describe those found in Taiwan.

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Japan's Corporate Groups: Collusive or Competitive? An Empirical Investigation of Keiretsu Behavior

Cited by 166 publications

References 0 publications

Has Abenomics Succeeded in Raising Japan's Inward Foreign Direct Investment?

Has Abenomics Succeeded in Raising Japan's Inward Foreign Direct Investment?

A new methodology linking concentration dynamics to current and steady-state profits:Examining Korean industrial policy during take-off

A market-power based model of business groups

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