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Organizational Entry Deterrence Barrier:The Japanese Firm vs.the American Firm

Author

Listed:
  • Koichi Futagami

    (Osaka University)

  • Makoto Okamura

    (Hiroshima University)

  • Tetsuya Shinkai

    (Kwansei Gakuin University)

  • Nobuhiro Mori

    (Nara University of Education)

Abstract

We formulate a three-stage game in which a Japanese firm as a generalized labor-managed firm and an American firm as a profit-maximizing firm compete in the homogeneous product market. In the first stage of the game, both the firms decide whether they enter the market or not. In the second stage, they invest capital stocks. In the third stage, they play a Nash-Cournot quantity game. We show that the Japanese firm employs more capital and produces more than does the American firm. By intentionally raising its fixed cost, the Japanese firm can survive in the market even though the American firm exits. Based on the difference in firm objectives, the Japanese firm builds an organizational deterrence barrier against the American firm through its high fixed cost. We give a rationale for long-term transactions between Japanese firms.

Suggested Citation

  • Koichi Futagami & Makoto Okamura & Tetsuya Shinkai & Nobuhiro Mori, 2005. "Organizational Entry Deterrence Barrier:The Japanese Firm vs.the American Firm," Discussion Paper Series 23, School of Economics, Kwansei Gakuin University, revised Jan 2005.
    • Handle: RePEc:kgu:wpaper:23
    as

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    References listed on IDEAS

    as
    1. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Generalized Labor-Managed Firm; Profit-Maximizing Firm; Organizational Entry Deterrence;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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