Japan's oligopolies: Potential economy wide gains from structural reforms

Akihito Asano and Rodney Tyers

Economic Modelling, 2019, vol. 82, issue C, 361-375

Abstract: Japan's slowdown preceded those in the other advanced economies and is therefore of global significance. While its initial causes were financial, a resurgence will depend on productivity growth, key determinants of which are investment and industrial structure. This paper focuses on the costs of a structure dominated by oligopolies and the potential gains from combined competition and tax reform. We first identify industry concentration levels and economic rents using firm specific data and then incorporate these in a calibrated economy-wide model. Simulations suggest that competition policy and more openness to investment in services could deliver 5–17% of additional GDP. These stimulate investment via returning external wealth. Gains are spread most evenly if competition policy is combined with company tax reform. This retains fiscal balance and improves the domestic purchasing power of all Japanese incomes.

Keywords: Regulation; Oligopoly; Services; Price caps; Privatisation; General equilibrium; Industrial reform (search for similar items in EconPapers)
JEL-codes: C68 D43 F41 L13 L43 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:82:y:2019:i:c:p:361-375

DOI: 10.1016/j.econmod.2019.01.017

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