タイトル：Market Size and Entrepreneurship
In order to examine the impacts of market size on entrepreneurship, we estimate a monopolistic competition model that involves the workers’ decisions to pursue entrepreneurship by using data on Japanese prefectures. Our results show that a larger market size in terms of population density leads to a higher incentive for individuals to become entrepreneurs. A ten percent increase in the population density increases the share of people who wish to become entrepreneurs by two percent. In contrast, the self-employment ratio is lower in prefectures with higher population density; this suggests that the market size has different impacts on the entrepreneurship in different stages.