Market Size and Entrepreneurship

Yasuhiro Sato, Takatoshi Tabuchi () and Kazuhiro Yamamoto ()

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: In order to examine the impacts of market size on entrepreneurship, we estimate a monopolisticcompetition model that involves the workers' decisions to pursue entrepreneurship by using dataon Japanese prefectures. Our results show that a larger market size in terms of populationdensity leads to a higher incentive for individuals to become entrepreneurs. A 10% increase inthe population density increases the share of people who wish to become entrepreneurs byapproximately 1%. In contrast, such a positive effect on the self-employment rate is observedonly for prefectures with very high or very low densities. The self-employment ratio isnegatively associated with population density in prefectures with medium densities.

New Economics Papers: this item is included in nep-ent and nep-ure
Date: 2012-01
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Related works:
Journal Article: Market size and entrepreneurship (2012)
Working Paper: Market Size and Entrepreneurship (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:eti:dpaper:12002

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