Entry regulations, welfare and determinants of market structure

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 1102

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Oligopoly and Other Imperfect Markets ; Retail and Wholesale Trade; e-Commerce
• Subject: Imperfect competition ; product differentiation ; retail markets ; entry ; exit ; sunk costs ; welfare

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Maican, Florin ; Orth, Matilda
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/129657
• Last update: 10.03.2025, 11:41 AM CET