Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95651
Authors: 
Maican, Florin
Orth, Matilda
Year of Publication: 
2013
Series/Report no.: 
IFN Working Paper 984
Abstract: 
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.
Subjects: 
Imperfect competition
product differentiation
retail markets
entry
exit
sunk costs
JEL: 
L11
L13
L81
Document Type: 
Working Paper

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