Assessing Excess Profits from Different Entry Regulations

XREAP 2009-03

40 Pages Posted: 3 May 2011

Date Written: April 1, 2009

Abstract

Entry regulations affecting professional services such as pharmacies are common practice in many European countries. We assess the impact of entry regulations on profits estimating a structural model of entry using the information provided by a policy experiment. We use the case of different regional policies governing the opening of new pharmacies in Spain to show that structural models of entry ought to be estimated with data from policy experiments to pin down how entry regulations change payoffs functions of the incumbents. Contrary to the public interest rationales, regulations are not boosting only small town pharmacies payoffs nor increasing all pharmacies payo¤s alike. The gains from regulations are very unevenly distributed, suggesting that private interests are shaping the current mix of entry and markup regulations.

Keywords: entry, regulation, professional services

JEL Classification: L51, H51, L84, I18

Suggested Citation

Borrell Arqué, Joan-Ramon and Fernández-Villadangos, Laura, Assessing Excess Profits from Different Entry Regulations (April 1, 2009). XREAP 2009-03, Available at SSRN: https://ssrn.com/abstract=1825117 or http://dx.doi.org/10.2139/ssrn.1825117

Joan-Ramon Borrell Arqué (Contact Author)

University of Barcelona ( email )

Av. Diagonal, 690
Barcelona, 08034
Spain

Laura Fernández-Villadangos

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

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