TY - JOUR
T1 - Deregulation and strategic complements
T2 - Japanese gasoline market
AU - Goto, Ujo
AU - Mckenzie, Colin R.
N1 - Funding Information:
This research is supported by a Grant-in-aid for Scientific Research, Category (C) (No. 17530186) awarded by the Japan Society for the Promotion of Science.
PY - 2011/7
Y1 - 2011/7
N2 - The purpose of this article is to provide an explanation for the success of deregulation implemented in the Japanese oil industry by investigating the economic norm in Japanese gasoline market, namely, how a firm expects its rivals to react when the firm changes its output decisions. Using the conjectural opponent's reaction, this article investigates whether the economic norm in Japanese gasoline market is strategic complements or strategic substitutes. It is found that the economic norm in the Japanese gasoline market over the period 1992 to 2003 is strategic complements, that is, 'Do it, since everyone else is doing it'. It is suggested that some of the fall in gasoline prices said to result from successful deregulation should really be attributed to the production expansion derived from this strategic complementarity.
AB - The purpose of this article is to provide an explanation for the success of deregulation implemented in the Japanese oil industry by investigating the economic norm in Japanese gasoline market, namely, how a firm expects its rivals to react when the firm changes its output decisions. Using the conjectural opponent's reaction, this article investigates whether the economic norm in Japanese gasoline market is strategic complements or strategic substitutes. It is found that the economic norm in the Japanese gasoline market over the period 1992 to 2003 is strategic complements, that is, 'Do it, since everyone else is doing it'. It is suggested that some of the fall in gasoline prices said to result from successful deregulation should really be attributed to the production expansion derived from this strategic complementarity.
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U2 - 10.1080/00036840903103700
DO - 10.1080/00036840903103700
M3 - Article
AN - SCOPUS:79960833656
SN - 0003-6846
VL - 43
SP - 2185
EP - 2192
JO - Applied Economics
JF - Applied Economics
IS - 17
ER -