The proposed research is concerned with the dynamism and future structure of an energy industry in Japan and USA. A corporate diversification of the electricity industry is a primary research issue in the proposed study. An expected contribution of the project research is to make policy suggestions for the energy issue from an economical perspective of the industrial organization in the context of deregulation. To attain the research objective, the proposed research will investigate the energy issue from the three perspectives: (a) economic impacts of the deregulation policy on the electricity industry, (b) changes of an industrial structure and (c) a financial strategy of corporations . All analyses and policy suggestions on the three issues will be integrated into a research effort on corporate diversification in the investigation. All of the three issues have never been sufficiently investigated in previous research efforts on energy policy . The importance of the proposed research can be easily justified from both a legal change and a recent research on the energy policy . For example, new energy/electricity laws have been enacted along the deregulation . Electricity industry and consumers are required to adjust themselves to respond to the legal change in both Japan and the United States. In addition, it is observed that no research has been sufficiently explored regarding how to respond to the recent change of the energy policy . Thus, it is hoped that the proposed research makes a contribution in providing policy suggestions for the industrial and energy development in Japan and the United States. Since the proposed research is an empirical study, the principal investigator will apply well-known econometric methods for data analysis. These econometric methods are referred to "simultaneous equations models of discrete choice behavior, " and they are solved by a use of an advanced mathematical computation technique. It is expected that including the data analysis, the principal investigator needs an annual period to complete the whole research issue and the research site in the Ohio State University (OSU). She will cooperate with Professor Anil Makhija (a department chair of finance at OSU, Rismiller Professor of Finance) to complete this proposed research. The final product will be disseminated in a form of publication in international journals such as Journal of Finance and American Economic Review. Finally, it is hoped that policy suggestions obtained from the research can enhance mutual understanding and scientific cooperation between Japan and the United States.