TY - JOUR
T1 - Competition through endogenized tournaments
T2 - An interpretation of "face-to-face" competition
AU - Konishi, Hideki
AU - Okuno-Fujiwara, Masahiro
AU - Suzuki, Yutaka
N1 - Funding Information:
* The authors are grateful to Professors Mamoru Kaneko, Hitoshi Matsushima, and Noriyuki Yanagawa for their helpful comments. The first author is grateful for the financial support from Japan Society for the Promotion of Science and the second author acknowledges the financial support from the Program for Global Partnership through the Tokyo Center for Economic Research.
PY - 1996/9
Y1 - 1996/9
N2 - This paper presents an alternative solution, called "face-to-face" competition, to the hold-up problem of relation-specific investments in the world of incomplete contracts. By inherent multiplicity of equilibria and incentive-compatible equilibrium selection, a tournament among multiple agents is endogenously created in the structure of face-to-face competition to strengthen their investment incentive. This approach also explains, by the reason other than bargaining power and insurance, why typical auto-assemblers in Japan do not vertically integrate a single parts supplier but transact with two potentially competitive suppliers in their developments of new models. J. Japan. Int. Econ., September 1996, 10(3), pp. 199-232. Faculty of Economics, Seikei University; Faculty of Economics, The University of Tokyo; and Faculty of Economics, Hosei University.
AB - This paper presents an alternative solution, called "face-to-face" competition, to the hold-up problem of relation-specific investments in the world of incomplete contracts. By inherent multiplicity of equilibria and incentive-compatible equilibrium selection, a tournament among multiple agents is endogenously created in the structure of face-to-face competition to strengthen their investment incentive. This approach also explains, by the reason other than bargaining power and insurance, why typical auto-assemblers in Japan do not vertically integrate a single parts supplier but transact with two potentially competitive suppliers in their developments of new models. J. Japan. Int. Econ., September 1996, 10(3), pp. 199-232. Faculty of Economics, Seikei University; Faculty of Economics, The University of Tokyo; and Faculty of Economics, Hosei University.
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U2 - 10.1006/jjie.1996.0012
DO - 10.1006/jjie.1996.0012
M3 - Article
AN - SCOPUS:0030243451
SN - 0889-1583
VL - 10
SP - 199
EP - 232
JO - Journal of The Japanese and International Economies
JF - Journal of The Japanese and International Economies
IS - 3
ER -