Abstract

http://ssrn.com/abstract=2339052
 


 



Entry Regulations, Product Differentiation and Determinants of Market Structure


Florin Maican


University of Gothenburg, Department of Economics; Research Institute of Industrial Economics (IFN)

Matilda Orth


Research Institute of Industrial Economics (IFN), Stockholm

September 29, 2013

IFN Working Paper No. 984

Abstract:     
We use a dynamic oligopoly model of entry and exit to evaluate how entry regulations affect profitability and market structure in retail. The model incorporates demand and store-level heterogeneity. Based on unique data for all retail food stores in Sweden, we find that the average entry costs for small and large stores are 10 and 18 percent lower, respectively, in markets with liberal compared with restrictive regulations. Counterfactual simulations show that lower entry costs in restrictive markets result in higher entry rates and allow us to quantify the consequences of regulations in light of trade-offs between small and large stores.

Number of Pages in PDF File: 56

Keywords: Imperfect competition, Product differentiation, Retail markets, Entry, Exit, Sunk costs

JEL Classification: L11, L13, L81

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Date posted: October 12, 2013  

Suggested Citation

Maican, Florin and Orth, Matilda, Entry Regulations, Product Differentiation and Determinants of Market Structure (September 29, 2013). IFN Working Paper No. 984. Available at SSRN: http://ssrn.com/abstract=2339052 or http://dx.doi.org/10.2139/ssrn.2339052

Contact Information

Florin Maican
University of Gothenburg, Department of Economics ( email )
Box 640
Goteborg
Sweden
HOME PAGE: http://sites.google.com/site/maicanfg/
Research Institute of Industrial Economics (IFN) ( email )
Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden
Matilda Orth (Contact Author)
Research Institute of Industrial Economics (IFN), Stockholm ( email )
Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden
HOME PAGE: http://www.ifn.se/matildao
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