Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129657
Authors: 
Maican, Florin
Orth, Matilda
Year of Publication: 
2015
Series/Report no.: 
IFN Working Paper 1102
Abstract: 
We use a dynamic oligopoly model of entry and exit with store-type differentiation to evaluate how entry regulations affect profitability, market structure and welfare. Based on unique data for all retail food stores in Sweden, we estimate demand, recover variable profits, and estimate entry costs and fixed costs by store type. Counterfactual policy experiments show that welfare increases when competition is enhanced by lower entry costs. Protecting small stores by imposing licensing fees on large stores is not welfare enhancing. This study sheds light on the long-run implications of entry regulations for the welfare of differentiated product industries with endogenous entry and exit.
Subjects: 
Imperfect competition
product differentiation
retail markets
entry
exit
sunk costs
welfare
JEL: 
L11
L13
L81
Document Type: 
Working Paper

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