The evolution of market structure plays a central role in the study of industrial dynamics. The present paper contributes to the field with a case study of Japan’s life insurance industry. It specifically focuses on the prewar period including the early years of the establishment of the industry. It exploits a comprehensive set of company data covering all life insurers. The analysis discerns five distinct stages in the development of the industry. They are characterized by different competitive conditions and firm growth patterns. The firm size distributions are as in other industries highly skewed, but they do not fully fit the shape predicted by stochastic growth processes. The emergence of five dominant companies of similar size in the 1930s can also not be explained by simple stochastic firm growth models. Cross-sectional and longitudinal growth patterns partially confirm Gibrat’s Law, which assumes that firm growth is not systematically influenced by firm size. Some of the findings can be related to the importance of trust in life insurance business. Competitive outcomes seem also to be influenced by the co-existence of two organizational forms. The findings should be corroborated by further research.
YingYing Jiang (Tue,) studied this question.