JAPANESE ANTITRUST - RECONCILING THEORY AND EVIDENCE

Japanese antitrust law exempts a variety of vertical and horizontal restraints that remain closely regulated in the United States. Despite these dissimilar antitrust environments, however, market concentration, firms' exercise of market power, and dead-weight loss from monopoly are highly similar in the two countries. The hypothesis that antitrust alters the relative mix of price to non-price competition rather than the absolute level that competition assumes might explain this empirical puzzle. Thus, this paper studies Japanese antitrust exemptions for resale price maintenance and export cartel associations to illustrate how adopting vertical and horizontal restraints has allowed Japanese firms to substitute towards forms of non-price competition better tailored to industry characteristics.