Differences in competitors’ market influence due to market structure: Evidence from Japanese gambling market.

Objective Overview

• This study examines how the structure of the Japanese gambling markets—specifically horse racing and Keirin racing—affects the degree to which large, high-turnover operators influence smaller, low-turnover operators.
• It highlights that the market structure shapes competitive dynamics and has implications for marketing and market segmentation strategies.

Introduction to the Research

• The research focuses on two types of gambling markets in Japan: horse racing and Keirin (bicycle racing).
• Each market has distinct structural characteristics influencing competition and operator interactions.
• Major operators refer to those with high betting turnovers, whereas minor operators have lower betting turnovers.

Market Structures Compared

• Horse Racing Market:
  • Characterized by a small number of competitors.
  • There is a large gap between major and minor operators in terms of turnover.
• Keirin Racing Market:
  • Many competitors exist in this market.
  • The turnover difference between major and minor operators is relatively small.

Key Research Methodology

• The study employed panel data analysis to quantify the influence of major operators on minor operators within each market.
• Panel analysis allows observing how changes in one operator’s turnover may affect competitors over time.

Main Findings

• In the horse racing market:
  • Minor operators with low turnover are significantly influenced by major operators with high turnover.
  • This suggests that in a concentrated market, dominant players can exert strong market influence.
• In the Keirin market:
  • Minor operators are less affected by the high-turnover competitors.
  • This may be due to the large number of competitors and smaller turnover differences, leading to more balanced competition.

Implications of the Findings

• Market structure profoundly influences the competitive dynamics and how firms respond to each other.
• In markets like horse racing with few dominant players, major operators’ strategies can strongly shape minor operators’ performance and behavior.
• In more fragmented markets like Keirin, smaller operators may have more independence in their marketing and operational approaches.
• These findings suggest:
  • Policy-makers should consider market concentration when devising segmentation and regulatory policies.
  • Firms must adapt marketing efforts based on the competitive environment; for example, aggressive strategies by major operators might suppress minor competitors in concentrated markets.

Summary

• The study offers empirical evidence that market structure modulates the degree of influence high-turnover operators have on lower-turnover competitors.
• Understanding these dynamics helps in designing better market segmentation policies and optimizing marketing strategies tailored to the competitive environment.