Determinants of domestic market structure: A comparative study between Japanese and Taiwanese manufacturing

Abstract

This paper examines the role of domestic and foreign competition in explaining the market structure of a mature industrial economy, Japan, compared with a newly industrializing economy (NIE), Taiwan. Panel data analysis is carried out for a period spanning the 1980s and 1990s for both countries with manufacturing data. Domestic and foreign competition are both found to be important in analyzing market structure dynamics. Following Sutton's (1991, 1998) lower-bounds approach to the determinants of market structure, differences in the role of market size are analyzed in explaining the market structure for both economies.