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

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  • Takechi, Kazutaka
  • Higashida, Keisaku

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.

Suggested Citation

  • Takechi, Kazutaka & Higashida, Keisaku, 2012. "Firm organizational heterogeneity and market structure: Evidence from the Japanese pesticide market," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 193-203.
  • Handle: RePEc:eee:indorg:v:30:y:2012:i:2:p:193-203
    DOI: 10.1016/j.ijindorg.2011.09.001
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    References listed on IDEAS

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    More about this item

    Keywords

    Firm organization; Entry behavior; Pesticide market;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • N55 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Asia including Middle East

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