Business Groups and Trade in East Asia: Part 1, Networked Equilibria

Robert Feenstra, Deng-Shing Huang and Gary G. Hamilton

No 5886, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We propose an economic model of business groups that allows for the cooperative behavior of groups of firms, where the number and size of each group is determined endogenously. In this framework, more than one configuration of groups can arise in equilibrium: several different types of business groups can occur, each of which is consistent with profit-maximization and is stable. This means that the economic logic does not fully determine the industrial structure, leaving scope for political and sociological factors to have a lasting influence. In a companion paper, we argue that the differing structures of business groups found in South Korea, Taiwan and Japan fit the stylized results from the model, and contrast the impact of these groups on the product variety of their country exports to the United States.

JEL-codes: D23 F14 (search for similar items in EconPapers)
Date: 1997-01
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published as "Business Groups and Product Variety in Trade: Evidence from South Korea, Taiwan, and Japan", Journal of International Economics, Vol. 47, no. 2 (April 1999).

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