Long-Term Manufacturer-Distributor Relationships

Tatsuhiko Nariu and Akio Torii

Japanese Economy, 2008, vol. 35, issue 2, 87-117

Abstract: We attempt to answer the question of what circumstances help bring about a long-term relationship. By a model analysis we demonstrate that a long-term relationship prevails when the cost-cutting effect of relation-specific resources is considerable, variance in demand is small, consumers are more loyal to brands, and adjustments of production scale and inventory level are easy. A case study analyzing the difference between automobile distribution systems in Japan and the United States, and a cross-section analysis of Japanese wholesale divisions, provide strong support for the conclusions drawn from the model analysis.

Date: 2008
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DOI: 10.2753/JES1097-203X350206

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