Entry Regulations, Product Differentiation and Determinants of Market Structure

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 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. Terms of use: Documents in EconStor may

Pooling data across markets in dynamic Markov games

“…2 Examples include Beresteanu, Ellickson, and Misra (2010), Collard-Wexler (2013), Dunne, Klimek, Roberts, and Xu (2013), Fan and Xiao (2014), Jeziorski (2014), Lin (2015), Maican and Orth (2014), Minamihashi (2012), Nishiwaki (2015), Ryan (2012), Sanches and Silva Junior (2013), Snider (2009), Suzuki (2013), and Sweeting (2013). They impose the assumption of a single and identical equilibrium in all markets either explicitly or implicitly.…”

A dynamic analysis of entry regulations and productivity in retail trade

“…The advantage of a single agent framework is that it allows for an improved understanding of store heterogeneity. By contrast, endogenizing competition by considering strategic interactions in a dynamic game framework markedly complicates the analysis and imposes additional assumptions Dunne et al, 2013;Maican and Orth, 2013). 23 Entry regulation is exogenous in the productivity process such that individual stores do not affect the outcome of regulation or form expectations about the stringency of future regulation.…”

“…To the best of our knowledge, this paper is among the first to utilize a dynamic structural model to quantify the effects of entry regulation on productivity in retail. In doing so, this paper contributes a structural framework to previous research on how regulations affect productivity (Djankov et al, 2002;Syverson, 2011;Greenstone et al, 2012;Buccirossi et al, 2013) and relates to a growing body of literature on land use regulation (Maican and Orth, 2013;Suzuki, 2013;Turner et al, 2014). Further, the proposed framework complements the existing retail literature (Bertrand and Kramarz, 2002;Haskel and Sadun, 2011;Schivardi and Viviano, 2011;Sadun, forthcoming) 3 and contributes to recent work on productivity dynamics in retail (Foster et al, 2006;Basker, 2007;Basker, 2012).…”

“…Section 6 concludes. In several places, we refer to an 2 Such assumptions raise concerns about, for instance, functional forms of cost functions, multiple equilibria, and aggregation to reduce the computational complexity Dunne et al, 2013;Maican and Orth, 2013). 3 Schivardi and Viviano (2011) find that strict entry regulations hinder productivity in the Italian retail trade.…”

Productivity Dynamics and the Role of ‘Big‐Box’ Entrants in Retailing

“…Using the same data, Roeger [] finds a markup of approximately 1.50 for food and kindred products. For Swedish retail food, Maican and Orth [] find an estimated average price elasticity of approximately −3 for large stores and −3.8 for small stores.…”