During the last decade, economists and policy makers have extensively discussed what types of firms can exploit external markets by exporting and what happens to domestic firms if external competitors penetrate into the home market. Although both theoretical and empirical studies have been...

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...