Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101006
Authors: 
Dunne, Timothy
Klimek, Shawn D.
Roberts, Mark J.
Xu, Daniel Yi
Year of Publication: 
2013
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2013-10
Abstract: 
This paper estimates a dynamic, structural model of entry and exit in an oligopolistic industry and uses it to quantify the determinants of market structure and long-run firm values for two U.S. service industries, dentists and chiropractors. Entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are all found to be important determinants of long-run firm values, firm turnover, and market structure. Estimates for the dentist industry allow the entry cost to differ for geographic markets that were designated as Health Professional Shortage Areas and in which entry was subsidized. The estimated mean entry cost is 11 percent lower in these markets. Using simulations, we compare entry-cost versus fixed-cost subsidies and find that entry-cost subsidies are less expensive per additional firm.
Subjects: 
entry
exit
market structure
competition
service industry
JEL: 
L11
L13
L84
Document Type: 
Working Paper

Files in This Item:
File
Size
370.35 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.