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Is the Japanese Distribution System Really Inefficient?


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  • Takatoshi Ito
  • Masayoshi Maruyama


This paper investigates the efficiency of the Japanese distribution system, measured by the distribution margin. Most of the discussions on the Japanese distribution system have so far relied on institutional descriptions and anecdotal evidence, failing to substantiate the case. The present paper will show that the Japanese and U.S. distribution sectors are about the same in terms of value added and distribution margins. Therefore, it is not true that the distribution sector adds up unnecessary distribution costs or earns monopolistic operating profits. This paper will not address a question whether the distribution system is acting as a non-tariff barrier. Thus, even if the distribution sector in Japan is judged to be "efficient," it leaves open a possibility that the distribution system works as a barrier to potential new entrants from both home and foreign manufacturers.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3306.

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Date of creation: Mar 1990
Date of revision:
Publication status: published as Trade With Japan: Has the Door Opened Wider?, ed. Paul Krugman. Chicago: The University of Chicago Press, 1991, pp. 149-173.
Handle: RePEc:nbr:nberwo:3306

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  1. Flath, David, 1990. "Why are there so many retail stores in Japan?," Japan and the World Economy, Elsevier, Elsevier, vol. 2(4), pages 365-386, December.
  2. Flath, David & Nariu, Tatsuhiko, 1989. "Returns policy in the Japanese marketing system," Journal of the Japanese and International Economies, Elsevier, vol. 3(1), pages 49-63, March.
  3. Flath, David, 1989. "Vertical restraints in Japan," Japan and the World Economy, Elsevier, Elsevier, vol. 1(2), pages 187-203, March.
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Cited by:
  1. David E. Weinstein, 1996. "Foreign Direct Investment and Keiretsu: Rethinking Us and Japanese Policy," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1750, Harvard - Institute of Economic Research.
  2. Potjes, J.C.A. & Thurik, A.R., 1992. "Retail Profit Margins in Japan and Germany," Papers, NEUHUYS - RESEARCH INSTITUTE FOR SMALL AND MEDIUM 9203, NEUHUYS - RESEARCH INSTITUTE FOR SMALL AND MEDIUM.
  3. Hyberg, Bengt & Uri, Noel D. & Oliveira, Valencia, 1996. "The quality characteristics of Japanese soybean imports," Japan and the World Economy, Elsevier, Elsevier, vol. 8(1), pages 81-98, March.
  4. Kenn Ariga & Kenji Matsui, 2003. "Mismeasurement of the CPI," NBER Chapters, in: Structural Impediments to Growth in Japan, pages 89-154 National Bureau of Economic Research, Inc.
  5. Knetter, Michael M., 1997. "Why are retail prices in Japan so high? Evidence from German export prices," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 15(5), pages 549-572, August.
  6. Peter Hooper & Elizabeth Vrankovich, 1995. "International comparisons of the levels of unit labor costs in manufacturing," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 527, Board of Governors of the Federal Reserve System (U.S.).
  7. David Flath, 2003. "Regulation, Distribution Efficiency, and Retail Density," NBER Working Papers 9450, National Bureau of Economic Research, Inc.
  8. Marcus Noland, 1993. "Protectionism in Japan," Open Economies Review, Springer, Springer, vol. 4(1), pages 67-81, March.
  9. Noland, Marcus, 1995. "Why are prices in Japan so high?," Japan and the World Economy, Elsevier, Elsevier, vol. 7(3), pages 255-261, September.


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