This paper surveys the recent literature on the Japanese distribution system to consider two propositions: first, that the system is inefficient, and second that prices of imported products tend to be higher in Japan than in other markets. Most of the literature demonstrates that the system is efficient. However, the efficiency has not necessarily resulted in high social welfare as consumers have had limited access to various product lines or paid high prices for some products. This paper examines the distribution system in the automobile industry to promote understanding about the impacts of the system on price differentials.
. The repair and parts after-purchase market for imports
There were two types of repair facilities in the after-purchase market: dealers’ repairshops and independent licensed garages. Dealers’ repairshops procured over 90 percent of their parts and materials from dealers’ affiliated wholesalers and dealt only with “genuine” parts. 1/ “Genuine” parts were the parts made by the parts manufacturer with a contract to supply parts to a certain automobile manufacturer that provided detailed specifications. “Genuine” parts were distributed through both the automobile