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Risk sharing in the supplier relationship: new evidence from the Japanese automotive industry

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  • Okamuro, Hiroyuki

Abstract

The Japanese corporate system is assumed to contain an implicit insurance mechanism in various aspects. This paper proves the existence of risk sharing mechanism in supplier relations in a different way from the previous studies, using a unique data set of Japanese automotive parts suppliers. The results suggest that the auto makers absorb a part of the business risk of the suppliers, in spite of recent structural changes in the supplier system: The relative stability of their profit rate is significantly influenced by the intensity of business relations.
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  • Okamuro, Hiroyuki, 2001. "Risk sharing in the supplier relationship: new evidence from the Japanese automotive industry," Journal of Economic Behavior & Organization, Elsevier, vol. 45(4), pages 361-381, August.
    • Handle: RePEc:eee:jeborg:v:45:y:2001:i:4:p:361-381
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    Cited by:

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    2. Sebastian Heise, 2016. "Firm-to-Firm Relationships and Price Rigidity - Theory and Evidence," CESifo Working Paper Series 6226, CESifo.
    3. Matsushima, Noriaki & Shinohara, Ryusuke, 2014. "What factors determine the number of trading partners?," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 428-441.
    4. Lincoln, James R., 2009. "Strategic Alliances in the Japanese Economy: Types, Critiques, Embeddedness, and Change," Institute for Research on Labor and Employment, Working Paper Series qt87j3h103, Institute of Industrial Relations, UC Berkeley.
    5. Chifeng Dai, 2021. "Optimal sequential contract with a risk‐averse supplier," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 92-125, February.

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