First we consider the relationship between cartel formation and demand factors. When the growth rate of the value of shipments is positive, the revenue is expected to increase in the future. In such a case, firms will be preferred to form a cartel rather than to compete because profits are expected to increase in the future with all the other things being held constant. Therefore, there will be a positive relationship between the demand growth and cartel formation. As for the fluctuation in the growth rate of the value of shipments, the greater the fluctuation becomes, the greater the level of market demand uncertainty will become. However, the occurrence of uncertainty implies that future profits will also become uncertain and thus firms will be preferred to break the cartel and try to make money in short run rather to stay in the cartel. Therefore, when uncertainty in future demand increases, cartels will destabilize. This means that demand fluctuations and cartel formation are thought to have a negative correlation. Thus, in summarizing the evaluation of demand factors, it is hypothesized that the growth rate of the value of shipments has a positive relation, while fluctuations in the same growth rate has a negative relation, with cartels.

Next, we consider the relationship between cartels and supply factors such as industry concentration and entry barriers. A larger number of cartel companies make it difficult to maintain the cartel, and, conversely, a smaller number of companies are thought to make it easier to sustain a cartel. Because of the relationship that when there are a large number of companies, the level of market concentration decreases and conversely the level of market concentration increases when there are fewer companies, there will be a positive relation between the degree of industry concentration and cartel formation. As for entry barriers, when this is high, the number of existing companies is lower and new entries cannot be expected. Therefore, similarly to industry concentration, there will be positive relation between entry barriers and cartel formation. In this analysis, we used HHI and CR3 as measures of the degree of industry concentration, and inventory of products per establishment and machinery/equipment acquisition value per establishment as proxy variables for entry barriers. Both variables are thought to have a positive sign.

For other variables, particularly those related to employment, we will discuss our interpretations of the effect of machinery/equipment acquisition costs per employee, the value of shipments which is used to control the effect of industry size, the value of shipments per establishment, and the several ratios on cartel formation as we obtain our estimates.

### 4. Results of estimating the Effect to facilitate or hinder collusion

This section explains results of estimation of industry structural factors influencing whether or not cartels exist, whether or not cartels occur only once or more, and the number of cartels. For each analysis, we estimate three different models in total: the basic model, the CUR model in which the CUR is added to the basic model, and the ratio model in which various ratios (tangible fixed asset ratio, cash earnings ratio, machinery/equipment ratio, and product inventory ratio) are added to control industry scale effects. $ ^{5} $