Competition through endogenized tournaments: An interpretation of "face-to-face" competition

Hideki Konishi, Masahiro Okuno-Fujiwara, Yutaka Suzuki

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)199-232
Number of pages34
JournalJournal of the Japanese and International Economies
Volume10
Issue number3
DOIs
Publication statusPublished - 1996 Sep
Externally publishedYes

Fingerprint

supplier
interpretation
Japan
incentive
economics
bargaining power
insurance
Tournament
Economics
Suppliers
Incentive compatible
Multiplicity
Equilibrium selection
Multiple agents
Insurance
Specific investments
Tokyo
Investment incentives
Bargaining power
Hold-up problem

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

Competition through endogenized tournaments : An interpretation of "face-to-face" competition. / Konishi, Hideki; Okuno-Fujiwara, Masahiro; Suzuki, Yutaka.

In: Journal of the Japanese and International Economies, Vol. 10, No. 3, 09.1996, p. 199-232.

Research output: Contribution to journalArticle

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