Partial ownership arrangements in the Japanese automobile industry; 1990-2000

The end of the 1990’s saw a number of foreign automobile manufacturers become the largest shareholders in several Japanese automobile manufacturers. It seems logical to conclude that a firm only enters into a partial ownership arrangement (POA) if it is profit maximizing. However, research to date has treated POAs as if exogenous to the model. This paper develops a model that assumes POAs are determined endogenously. Data for the Japanese automobile industry are then used to investigate the factors that determine whether a firm enters into a POA, and the effects a POA has on the price-cost margin. The findings of this paper suggest that while both foreign and domestic firms take an interest in product mix when exploring POAs in the Japanese market, they have differing profit incentives. Furthermore, the level of ownership has a positive effect on POAs.

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Publication Type:
Journal Article
DOI and Other Identifiers:
Print ISSN 1514-0326 Online ISSN 1667-6726 (Other)
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Published in:
Journal of Applied Economics, Volume 07, Number 2
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Total Pages:
JEL Codes:
L0; L6

 Record created 2017-04-01, last modified 2018-01-22

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