Measurement of the Market Power of Firms: The Japanese Case in the 1990s

Posted: 1 Jun 2009

See all articles by Kozo Kiyota

Kozo Kiyota

Keio University - Keio Economic Observatory

Takanobu Nakajima

Keio University - Faculty of Business and Commerce

Kiyohiko G. Nishimura

National Graduate Institute for Policy Studies (GRIPS); University of Tokyo

Date Written: June 2009

Abstract

This article presents a new simple econometric framework for the estimation of individual firms’ markup over their marginal cost, taking account of firm heterogeneity, demand-driven cyclical price changes, and the limited availability of firm-level information. The framework is applied to study markup of Japanese firms in manufacturing and wholesale/retail trade for 1994-2002. The results indicate that, on average, the Japanese markets become more competitive in the 1990s than before even in non-manufacturing industries. We also find sizable heterogeneity and non-negligible pro-cyclicality in the markup of the Japanese firms.

Suggested Citation

Kiyota, Kozo and Nakajima, Takanobu and Nishimura, Kiyohiko G., Measurement of the Market Power of Firms: The Japanese Case in the 1990s (June 2009). Industrial and Corporate Change, Vol. 18, Issue 3, pp. 381-414, 2009. Available at SSRN: https://ssrn.com/abstract=1411514 or http://dx.doi.org/dtp017

Kozo Kiyota (Contact Author)

Keio University - Keio Economic Observatory ( email )

Mita 2-15-45, Minato-ku
Tokyo, 108-8345
Japan

Takanobu Nakajima

Keio University - Faculty of Business and Commerce ( email )

2-15-45 Mita
Minato-ku
Tokyo 108-8345
Japan

Kiyohiko G. Nishimura

National Graduate Institute for Policy Studies (GRIPS)

7-22-1 Roppongi, Minato-Ku
Tokyo 106-8677, Tokyo 106-8677
Japan

University of Tokyo

Yayoi 1-1-1
Bunkyo-ku
Tokyo, Tokyo 113-8657
Japan

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