2000 Fiscal Year Final Research Report Summary
Comparative Trading Institutions Analysis
| Project/Area Number |
10630100
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Commerce
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| Research Institution | Kobe University |
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Principal Investigator |
KOJIMA Kenji Research Institute for Economics & Business Administration, Kobe University, Professor, 経済経営研究所, 教授 (50121455)
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| Co-Investigator(Kenkyū-buntansha) |
SUEHIRO Hideo Graduate School of Business Administration, Kobe University, Associate Professor, 経営学研究科, 助教授 (30162837)
TAKASHIMA Katsuyoshi Graduate School of Business Administration, Kobe University, Professor, 経営学研究科, 教授 (30197090)
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| Project Period (FY) |
1998 – 2000
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| Keywords | Trading institutions / Trading practices / Trading relationships / Comparative institutions analysis / Transaction costs / Distribution / Game theory / Economics of information |
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| Research Abstract |
This research examines the trading institutions from an international perspective based on game theory. Trading institutions are important concerns for firms that transact intermediate goods to achieve an efficient system. Various systems of trading relationships have evolved in different countries to attain efficient trading relationships. Particularly, there are significant differences in vertical relationships between Japan and the United States. In Japanese vertical relationships, in contrast, suppliers are an integral part of the product development and manufacturing processes : they are heavily involved, assume significant responsibility, and communicate extensively and directly with product and process engineers. Japanese suppliers frequently play a significant role in product development. Japanese firms do not rely on legal contracts to protect their interests in trading relationships.
This research identifies major characteristics of Japanese trading relationships in a game-theoretic perspective. Given contractual incompleteness due to uncertainty and complexity, as durable relationship-specific investments become more important, the transaction costs associated with mediating vertical relationships using arm's length market increase hierarchy and only a few hundred at the first-tier. Vertical relationships in Japan involve building to reduce transportation costs and generally improve coordination. Significant features of Japanese trading relationships are identified : long-term relationships and commitments with effective communication ; forced competition among few suppliers ; willingness to make transaction-specific investments as well as to share technical information ; significant involvement of suppliers in product development.
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