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Market Size and Entrepreneurship

  • Yasuhiro Sato


    (Graduate School of Economics, Osaka University (Japan))

  • Takatoshi Tabuchi


    (Faculty of Economics, University of Tokyo (Japan))

  • Kazuhiro Yamamoto


    (Graduate School of Economics, Osaka University (Japan))

In order to examine the impacts of market size on entrepreneurship, we estimate a monopolistic competition model that involves entrepreneurial decision by using data on Japanese prefectures. Our results show that a larger market size measured by the population density leads to higher incentive of people to become entrepreneurs. a 10 percent increase in the population density increases the share of people who wish to become entrepreneurs by 2 percent. In contrast, the self-employment ratio is lower in prefectures with higher population density, which suggests that the market size has different impacts on the entrepreneurship in different stages.

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Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 09-07.

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Length: 30 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:osk:wpaper:0907
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