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

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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