Book Review: Industrial Organisation in Japan

• Published date: 01 December 1977
• Date: 01 December 1977
• Author: Corwin D. Bdwards
• DOI: 10.1177/0003603X7702200411
• Subject Matter: Book Reviews

Richard

E. Caves

and

Masu Uekusa, Lndustrial Organization

in Japan, Washington, D.C.: Brookings

Institution

(1976),

169 pp., $9.95 cloth, $3.50

paper.

This book (a specialized sequel to a

study

of the

Japanese

economy by a

group

of American

and

Japanese

economists

that

Brookings published

earlier

in 1976) is a pioneering

effort to test, largely by statistical comparisons, the appli-

cability to the

Japanese

economy of concepts

and

hypotheses

of

industrial

organization

that

are

generally accepted in

Western

economics.

The

work was carefully

and

discerningly

done.

Its

conclusions

are

numerous, rich,

and

complex. Some

of

them

are

convincing; many provide

at

least persuasive

hypotheses; a few

are

very

tentative,

and

are

identified as

such.

In

some instances

what

was available

cast

no light upon

its problem;

but

such

gaps

are

fewer

and

their

importance

is less

than

this reviewer would have expected. The book is

likelv to become indispensable to serious students of the

Japanese

economy;

and

it

should have

substantial

value in

suggesting to others useful possibilities

for

testing

hypotheses

about

industrial

structure

and

conduct by national compari-

sons.

The

authors'

conclusions

may

be summarized as follows:

.Iapan

and

the

United

States

are

similar in average indus-

trial

concentration

and

the influences

that

bring

it

about;

similar, too, in the tendency of

higher

profits to be associ-

ated

both with such concentration

and

with

large

advertising

outlays.

But

Japan's

rapid

growth

has

reduced the effect of

market

structure

upon performance,

has

hindered collusion

and

oligopolistic coordination,

has

enabled

large

companies

to keep

their

profits

large

by exploiting business opportuni-

ties as these develop,

and

(along with the availability of

financing from collaborative groups of firms)

has

helped to

keep

barriers

to

entry

relatively low, except in industries in

which the government

has

heen

trying

to enlarge

plant

size

and

firm size.

Clusters of allied firms, often with a

bank

at

the center,

have facilitated financing, have

spread

their

risks, and, where

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