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Erscheinungsjahr: 
2018
Schriftenreihe/Nr.: 
Working Paper No. 2018-17
Verlag: 
Federal Reserve Bank of Chicago, Chicago, IL
Zusammenfassung: 
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.
Schlagwörter: 
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 der Erstveröffentlichung: 
Dokumentart: 
Working Paper

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