The Japanese Automobile Tyre Industry under Scrutiny

Xuan Dong Nguyen, Xavier de Vanssay and Craig Parsons

International Journal of the Economics of Business, 2015, vol. 22, issue 1, 141-162

Abstract: This paper investigates the evolution of competition in the Japanese tyre market from 1976 to 2010 (35 years). An innovative measure of competition developed by Jan Boone is employed, as well as traditional competition indices and price-cost margin regressions, using accounting data at the firm level. Traditional indicators such as the concentration ratio and Herfindahl-Hirschman Index (HHI) suggest a very high market concentration. However, regressions using the two Boone measures and price-cost margin suggest that some competitive behavior in the Japanese tyre industry exists. By introducing dummy variables for the Sumitomo-Ohtsu merger and antimonopoly action by the Japan Fair Trade Commission, the Boone-style regressions also suggest that the merger had no impact, but the cartel breakup did have a statistically significant (p > 0.1) impact on firm's profitability in this oligopolistic market.

Date: 2015
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DOI: 10.1080/13571516.2014.993567

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