131 industries. Among those, there were 35 cases of actions taken by JFTC. Table 1 indicates the industry classification code, number of cartels, and whether or not there is relevant data. Table 2-B provides summary statistics for the number of cartels. Looking at the intermediate classification (2-digit code), the industries with the highest number of confirmed cartels are the chemical industry (No. 17) and the ceramics, stone and clay products industry (No. 22), both with eight cartels. The steel industry (No. 23) follows them with four cartels (number of incidents based on calculations that do not include industries for which data was not available.). In the sub-category (3-digit code), the industries with the highest number of confirmed cartels were the oil and fat products, soaps, synthetic detergents, surface-active agents and paints industry (No. 175), the industrial organic chemicals industry (No. 173), and the copperware manufacturing industry (No. 221), each of which had three cartels. According to the OFT (2005), out of the 70 cartels (of which, 48 were manufacturing) against which action was taken by the EC between 1990 and 2004, and out of the 68 cartels (of which, 63 were manufacturing) against which action was taken by the U.S. Department of Justice (USDOJ) between 1994 and 2004, 11 and 14 cartels, respectively, were found in Manufacturer of Basic Chemicals. While a direct comparison is not possible because Japan does not use the same classification codes as EC or USDOJ, it can be seen that many cartels exist in the chemical industries among these three regions.

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## (2) Data used for independent variables

Next, we explain the data used for independent variables. Data used as independent variables are calculated by surveying all the establishments listed under “Industry Statistics” in the 1998 Industry Statistics Table of Manufacturing Census published by the Ministry of Economy, Trade and Industry (METI). This census includes value of shipments, number of employees, number of establishments, value of product inventory, cash earnings, value of year-end fixed tangible assets, and acquisition value of machinery and equipment. This data is noted by industry based on the 3-digit class as defined by the JSIC. For data on the demand growth rate, we calculated the growth rate of value of shipments from 1995 and 1998. Furthermore, for demand fluctuations, first we calculated the growth rate of the value of shipments between the adjacent two years (for example 1990 and 1993) from 1990 to 2004, and then take the standard deviation of the computed growth rates of the value of shipments. As the index for the degree of industry concentration, we used the Herfindahl-Hirschman Index (HHI) in 6-digit level published under “Corporate Statistics” in the Industrial Statistics Table for 2002 and the sum of shares of the top 3 companies (CR3) to compute the weighted average of HHI and CR3 with the value of shipment at 3-digit level industries as weight. As proxy variables for barriers to entry, we use the inventory per establishment and the machinery/device acquisition value per establishment, which was computed by dividing the inventory and the machinery/device acquisition value by the number of establishments, respectively. As a