IDEAS home Printed from
   My bibliography  Save this article

Industrial concentration, price-cost margins, and innovation


  • Flath, David


This paper explores a panel data set matching establishment-based production statistics from Japan's Census of Manufacturers with wholesale price indices from the Bank of Japan, and Herfindahl indices from the Japan Fair Trade Commission. The data include annual observations over the period 1961-1990, for 74 industries at the four-digit s.i.c. level. I estimate Cobb-Douglas production functions and Solow residuals for each industry and then use these estimates to further analyze the determinates of industrial concentration and innovation. The industries having great capital intensity and small employment of labor tend to be more concentrated. Cross-section estimates reveal a U-shaped mapping from concentration to innovation.

Suggested Citation

  • Flath, David, 2011. "Industrial concentration, price-cost margins, and innovation," Japan and the World Economy, Elsevier, vol. 23(2), pages 129-139, March.
  • Handle: RePEc:eee:japwor:v:23:y:2011:i:2:p:129-139

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    1. Wu, De-Min, 1973. "Alternative Tests of Independence Between Stochastic Regressors and Disturbances," Econometrica, Econometric Society, vol. 41(4), pages 733-750, July.
    2. Klette, Tor Jakob, 1999. "Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data," Journal of Industrial Economics, Wiley Blackwell, vol. 47(4), pages 451-476, December.
    3. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 701-728.
    4. Flath, David, 2014. "The Japanese Economy," OUP Catalogue, Oxford University Press, edition 3, number 9780198702405, June.
    5. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-333, March.
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    7. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
    8. SERGIO A. D e SOUZA, 2009. "ESTIMATING MARK-UPS FROM PLANT-LEVEL DATA -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 57(2), pages 353-363, June.
    9. INUI Tomohiko & KAWAKAMI Atsushi & MIYAGAWA Tsutomu, 2008. "Do Competitive Markets Stimulate Innovation?: An Empirical Analysis Based on Japanese Manufacturing Industry Data," Discussion papers 08012, Research Institute of Economy, Trade and Industry (RIETI).
    10. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    11. Okada, Yosuke, 2005. "Competition and productivity in Japanese manufacturing industries," Journal of the Japanese and International Economies, Elsevier, vol. 19(4), pages 586-616, December.
    12. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
    13. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    14. David C. Wyld, 2010. "ASecond Life for organizations?: managing in the new, virtual world," Management Research Review, Emerald Group Publishing, vol. 33(6), pages 529-562, May.
    15. David Flath, 2010. "Are There Any Cournot Industries?," ISER Discussion Paper 0766, Institute of Social and Economic Research, Osaka University.
    16. Yosuke Okada, 2005. "Competition and Productivity in Japanese Manufacturing Industries," NBER Working Papers 11540, National Bureau of Economic Research, Inc.
    17. Richard Gilbert, 2006. "Looking for Mr. Schumpeter: Where Are We in the Competition-Innovation Debate?," NBER Chapters,in: Innovation Policy and the Economy, Volume 6, pages 159-215 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. AMBASHI Masahito, 2013. "Does Competition Improve Industrial Productivity? An analysis of Japanese industries on the basis of the industry-level panel data," Discussion papers 13098, Research Institute of Economy, Trade and Industry (RIETI).
    2. Matsumura, Toshihiro & Matsushima, Noriaki & Cato, Susumu, 2013. "Competitiveness and R&D competition revisited," Economic Modelling, Elsevier, vol. 31(C), pages 541-547.
    3. David Flath, 2010. "Are There Any Cournot Industries?," ISER Discussion Paper 0766, Institute of Social and Economic Research, Osaka University.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:japwor:v:23:y:2011:i:2:p:129-139. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.