“The Changing Keiretsu: Is the Japanese Mode Still Efficient in the New Japan?” by Chelsea C. LIN
Chelsea C. LIN
National Dong-Hwa University
This paper applies an evolutionary model to characterize the structure of Japanese business groups since the 1990s. The simulation results of the dynamic model suggest the destabilization of the 1980s equilibrium. The equilibrium that Keiretsu system dominates in Japan and the traditional American system dominates in the US no longer exists. This model predicts an interior equilibrium, i.e., the co-existence of both systems in the US and Japan. Moreover, this interior equilibrium is reached only by a combination of very weak network effects, an expansion of demand in the US market, and the lower trade barriers in the capital and labor markets.