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Land Use Regulation as a Barrier to Entry: Evidence from the Texas Lodging Industry

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Author Info

  • Junichi Suzuki

Abstract

This paper examines the anticompetitive effects of land use regulation using microdata on mid-scale chain hotels in Texas. I construct a dynamic entry-exit model that endogenizes hotel chains' reactions to land use regulation. Estimation results indicate that imposing stringent regulation increases costs considerably. Hotel chains nonetheless enter highly regulated markets even if entry probabilities are lower, anticipating fewer rivals and hence greater market power. Consumers incur the costs of regulation indirectly in the form of high prices.

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File URL: http://www.economics.utoronto.ca/public/workingPapers/tecipa-412.pdf
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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-412.

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Length: 48 pages
Date of creation: 21 Oct 2010
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-412

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Keywords: Land use regulation; firms\' entry; lodging industry;

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Cited by:
  1. Victor Aguirregabiria & Pedro mira, 2007. "Dynamic Discrete Choice Structural Models: A Survey," Working Papers tecipa-297, University of Toronto, Department of Economics.
  2. Ricard Gil & Mitsukuni Nishida, 2012. "Does Regulation Drive Competition? Evidence from the Spanish Local TV Industry," Working Papers 12-05, NET Institute.
  3. Nathan Yang, 2011. "An Empirical Model of Industry Dynamics with Common Uncertainty and Learning from the Actions of Competitors," Working Papers 11-16, NET Institute.
  4. Otsu, Taisuke & Pesendorfer, Martin & Takahashi, Yuya, 2013. "Testing for Equilibrium Multiplicity in Dynamic Markov Games," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 423, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  5. Victor Aguirregabiria & Arvind Magesan, 2012. "Identification and estimation of dynamic games when players' beliefs are not in equilibrium," Working Papers tecipa-449, University of Toronto, Department of Economics.
  6. Sumon Datta & K. Sudhir, 2012. "Does Reducing Spatial Differentiation Increase Product Differentiation? Effects of Zoning on Retail Entry and Format Variety," Cowles Foundation Discussion Papers 1851, Cowles Foundation for Research in Economics, Yale University, revised Sep 2012.
  7. Nishida, Mitsukuni & Gil, Ricard, 2014. "Regulation, enforcement, and entry: Evidence from the Spanish local TV industry," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 11-23.
  8. Mitsukuni Nishida, 2012. "Estimating a Model of Strategic Network Choice: The Convenience-Store Industry in Okinawa," Economics Working Paper Archive 594, The Johns Hopkins University,Department of Economics.
  9. Aguirregabiria, Victor, 2009. "Estimation of Dynamic Discrete Games Using the Nested Pseudo Likelihood Algorithm: Code and Application," MPRA Paper 17329, University Library of Munich, Germany.
  10. repec:clg:wpaper:2012-03 is not listed on IDEAS
  11. Victor Aguirregabiria & Junichi Suzuki, 2013. "Identification and Counterfactuals in Dynamic Models of Market Entry and Exit," Working Papers tecipa-475, University of Toronto, Department of Economics.
  12. Mitsukuni Nishida, 2014. "The costs of zoning regulations in retail chains: the case of the City Planning Act of 1968 in Japan," Journal of Regulatory Economics, Springer, vol. 45(3), pages 305-328, June.
  13. Mitsukuni Nishida, 2008. "Estimating a Model of Strategic Store-Network Choice," Working Papers 08-27, NET Institute, revised Nov 2008.
  14. Ferrari, Stijn & Verboven, Frank, 2010. "Empirical analysis of markets with free and restricted entry," International Journal of Industrial Organization, Elsevier, vol. 28(4), pages 403-406, July.
  15. Aguirregabiria, Victor & Nevo, Aviv, 2010. "Recent developments in empirical IO: dynamic demand and dynamic games," MPRA Paper 27814, University Library of Munich, Germany.
  16. Maican, Florin & Orth, ┬┤Matilda, 2013. "Entry Regulations, Product Differentiation and Determinants of Market Structure," Working Paper Series 984, Research Institute of Industrial Economics.

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