Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/200587
Authors: 
Abbring, Jaap H.
Campbell, Jeffrey R.
Tilly, Jan
Yang, Nan
Year of Publication: 
2018
Series/Report no.: 
Working Paper 2018-17
Abstract: 
This paper develops an econometric model of firm entry, competition, and exit in oligopolistic markets. The model has an essentially unique symmetric Markov-perfect equilibrium, which can be computed very quickly. We show that its primitives are identified from market-level data on the number of active firms and demand shifters, and we implement a nested fixed point procedure for its estimation. Estimates from County Business Patterns data on U.S. local cinema markets point to tough local competition. Sunk costs make the industry's transition following a permanent demand shock last 10 to 15 years.
Subjects: 
demand uncertainty
dynamic oligopoly
firm entry and exit
nested fixed point estimator
sunk costs
toughness of competition
counterfactual policy analysis
JEL: 
L13
C25
C73
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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