Firm organizational heterogeneity and market structure: Evidence from the Japanese pesticide market

Kazutaka Takechi and Keisaku Higashida

International Journal of Industrial Organization, 2012, vol. 30, issue 2, 193-203

Abstract: This paper empirically investigates the effects of the organizational forms of firms on their entry behaviors and market structure. To exploit the exogenous variation in firm organizational forms, we use Japanese pesticide market data. First, our empirical analysis shows that a model of imperfect competition fits the Japanese pesticide market well despite the existence of regulations. We, then, estimate the effect of organizational heterogeneity on entry behavior. Firms having capital ties with special distribution networks tend to enter this market more readily than do firms without such ties. Furthermore, diversified and vertically nonintegrated firms are more likely to enter this market than are stand-alone and vertically integrated firms. These findings suggest that markets with distribution-related, diversified, and vertically nonintegrated potential entrants are more competitive than those with the same number of potential entrants that have no such characteristics.

Keywords: Firm organization; Entry behavior; Pesticide market (search for similar items in EconPapers)
JEL-codes: L13 L22 N55 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:30:y:2012:i:2:p:193-203

DOI: 10.1016/j.ijindorg.2011.09.001

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