ANALYSIS OF CONFLICT ILITWEEN INDONESIA AND JAPAN IN THE AUTOMOTIVE MARKET: Applications of the Analytic Hierarchy Process (AHP) and Game Theory
JOSE RIZAL JOESOEF (adv. Drs. Ahmad Jamli, MA), Drs. Ahmad Jamli, MA
In early 1996, Indonesia announced the program of National Car, which exempts Kia Motors, the second largest automaker in South Korea, from heavy tariffs and luxury taxes. The privileges enable Kia to make its sedan half the price of its nearest competitor's. As government officials frequently remark, the program is to achieve freedom of designing, producing, and exporting automotive products. Suffering from excess capacity and being faced with the maturity of European market, Japan is not pleased and assailed the program as violation of WTO regulations against protectionism. It is clearly visible that Japan is very much concerned with market accessibility to Indonesia, whose 190 million people make it one of the largest car markets in Asia. Such accessibility has proven to be greatly advantageous to the Japanese automotive investment, which account for 95 per cent of the cars currently (1995) sold in Indonesia. Alas for Japan, Jakarta designates South Korea as the son. Tokyo faces a rough road ahead.
According to Coase theorem, when conflict is present, the problem is not how to punish or to fine inflicting parties. The Coase world, in which all parties are price takers, dealing with a problem of a reciprocal nature. Fining the inflicting might have spillover effects on the market, and eventually on the inflicted. If there were no cost involved in carrying out negotiation, the system would lead to a natural arrangement of who is to be punished, to compensate, to bribe, to boycott, and so on. As long as the total effects of conflict situation are positive, let the market naturally solve its problem. Coase theorem is that this problem is primarily one of negotiation costs: the cost of getting the concerned parties together, of reaching agreement, of enforcing the terms of that agreement, of inspection, let alone the cost of maintaining credible commitment. In the presence of conflict and the high negotiation costs, a central authority or legal system is demanding to produce the service associated with negotiation costs. Remember that the Coasian rule is how much conflict cost market, instead of whom is to be punished.
Kata Kunci : Dominant Strategy, Nash Equilibrium, Prisoners' Dilemma, Focal Point, Credible Commitment, Coase Theorem, International Public Good, the Tragedy of Commons, Central Authority
