Market Structure and Competition among Retail Depository Institutions
Abstract
We assess competition among retail depository institutions in 1,884 rural markets. We estimate an equilibrium market structure model that endogenizes the operating decisions of three types of depository institutions: multimarket banks, single-market banks, and thrift institutions. Observed market structures and a game-theoretic specification of entry behavior identify the parameters of an underlying profit function. We find strong evidence that product differentiation generates additional profits for retail depository institutions. These profits help to maintain smaller banks and thrifts, even as larger banks expand their operations. Consumers have more options, as more institutions can profitably operate as a result of product differentiation. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.Download Info
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Bibliographic Info
Article provided by MIT Press in its journal The Review of Economics and Statistics.
Volume (Year): 89 (2007)
Issue (Month): 1 (02)
Pages: 60-74
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Handle: RePEc:tpr:restat:v:89:y:2007:i:1:p:60-74
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For corrections or technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).
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As found by EconAcademics.org, the blog aggregator for Economics research:- Guest Post: A New Financial Foundation?
by Leo Kolivakis in Naked capitalism on 2009-06-16 11:40:00
Cited by:
- Andrew M. Cohen & Beth A. Freeborn & Brian McManus, 2007. "Competition and Crowding-Out among Public, Non-Profit and For-Profit Organizations: Evidence from Outpatient Substance Abuse Treatment," Working Papers 52, Department of Economics, College of William and Mary.
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