Is the Japanese Distribution System Really Inefficient?
This paper investigates the efficiency of the Japanese
distribution system, measured by the distribution margin. Most
of the discussions on the Japanese distribution system have so
far relied on institutional descriptions and anecdotal evidence,
failing to substantiate the case. The present paper will show
that the Japanese and U.S. distribution sectors are about the
same in terms of value added and distribution margins. Therefore,
it is not true that the distribution sector adds up unnecessary
distribution costs or earns monopolistic operating profits.
This paper will not address a question whether the distibution
system is acting as a non-tariff barrier. Thus, even if the
distribution sector in Japan is jUdged to be "efficient," it
leaves open a possibility that the distribution system works as a
barrier to potential new entrants from both home and foreign
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