Market size and entrepreneurship

In order to examine the impacts of market size on entrepreneurship, we estimate a monopolistic competition model that involves the workers’ decisions to pursue entrepreneurship by using data on Japanese prefectures. Our results show that a larger market size in terms of population density leads to a...

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Published in:Journal of economic geography 2012-11, Vol.12 (6), p.1139-1166
Main Authors: Sato, Yasuhiro, Tabuchi, Takatoshi, Yamamoto, Kazuhiro
Format: Article
Language:English
Subjects:
Applied economics
Competition
Demographic economics
Economic models
Economies of agglomeration
Entrepreneurs
Entrepreneurship
Impact analysis
Market size
Monopolies
Monopolistic competition
Population density
Positive economics
Self employment
Studies
Urban economics
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description In order to examine the impacts of market size on entrepreneurship, we estimate a monopolistic competition model that involves the workers’ decisions to pursue entrepreneurship by using data on Japanese prefectures. Our results show that a larger market size in terms of population density leads to a higher incentive for individuals to become entrepreneurs. A 10% increase in the population density increases the share of people who wish to become entrepreneurs by ∼1%. In contrast, such a positive effect on the self-employment rate is observed only for prefectures with very high or very low density. The self-employment ratio is negatively associated with population density in prefectures with medium density. This suggests that the there are manyex anteentrepreneurs but fewex postentrepreneurs.
doi_str_mv 10.1093/jeg/lbr035
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source JSTOR Archival Journals and Primary Sources Collection; EconLit with Full Text; Oxford University Press:Jisc Collections:OUP Read and Publish 2024-2025 (2024 collection) (Reading list)
subjects Applied economics
Competition
Demographic economics
Economic models
Economies of agglomeration
Entrepreneurs
Entrepreneurship
Impact analysis
Market size
Monopolies
Monopolistic competition
Population density
Positive economics
Self employment
Studies
Urban economics
title Market size and entrepreneurship
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