|Author Name||NISHITATENO Shuhei (Consulting Fellow, RIETI)|
|Creation Date/NO.||July 2015 15-E-081|
|Research Project||Competitiveness of Japanese Firms: Causes and Effects of the Productivity Dynamics
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The question of whether incumbent firms could deter new entrants in a more concentrated market has been a major concern by both antitrust authorities and industrial economists. This study is the first attempt to analyze the relationship between the market structure and entry in the intermediate goods market, utilizing unique data on auto parts transactions between automakers and auto parts suppliers in Japan during the period 1990-2010. The results suggest that there exists a U-shaped relationship between market concentration and entry, which sees entry decreasing and then increasing as markets concentrate. This result could emanate from a significant role of multi-product and multi-customer firms.