independent variables used for the basic model are the value of shipments, the value of shipments per establishment, cash earnings per employee or per establishment, inventory per establishment, the growth rate of the value of shipments and its fluctuations measured by its standard deviation, machinery/equipment acquisition value per employee and per establishment.

## (1) Results of estimation of the model for the cartel formation

Regarding the relationship between the existence of cartels and structural factors, we conduct a binary logit model (BLM) that assigns the binary values as dependent variables explained in Section 2. We estimated three types of models (the basic, the CUR and the ratio models) but obtained similar results. We conducted Wald tests where the basic model is the null hypothesis and the other two models were alternate hypotheses, and the null hypothesis is not rejected. Therefore, basically we focus on the result of the basic model below. The BLM results are summarized in Table 4.

## < Table 4 around here >

The results show that as the value of shipments grows, the likelihood of cartel formation also grows and also that the larger the size of an industry is, the greater the likelihood of occurrences of cartels. However, considering the fact that the basis for our dependent variable is cartels which were captured by JFTC, the following interpretation is also possible. That is, because it is expected that the greater the size of an industry is, the greater the damage afflicted by a cartel on the overall economy is expected, competition authorities put their more resources in investigating large-scale industries.

Both of the two demand factors in our model (the growth rate of the value of shipments and its fluctuations) are confirmed to have a significantly negative effect on the formation of cartels. This result is the same for the basic model, the CUR model, and the ratio model, and we see that fluctuations in the growth rate of the value of shipments support a theoretical hypothesis. In other words, this means that in industry with unstable demand and uncertain economic environment cartels will become more difficult to form (or collapse easily). Conversely, the result that the growth rate of the value of shipments has a negative impact on cartel formation does not support a theoretical hypothesis. The negative sign means that cartels are easier to form when demand is on the decline. One interpretation of this result is that in a state of declining demand, companies seek to secure a certain level of profits through, for example, the formation of cartels instead of competing for their survival. This might be the reason for the negative relationship between the growth rate of the value of shipments and cartel formation.

Similarly, for the inventory value per establishment and the machinery/equipment acquisition value per establishment used as proxy variables for entry barriers, there is a positive relationship between these two variables and the formation of cartels, and thus this supports a theoretical hypothesis which states high entry barriers will facilitate collusion. We empirically confirmed that a higher degree of entry barriers