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On the Effect of Market Share Dispersion on New Firm Entry

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  • George Geronikolaou

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Abstract

Statistical estimations based on a number of European manufacturing sectors for the period 2007–2009 indicate that market share dispersion, as represented by various indices, is positively related to new firm entry. This finding contradicts the theoretical view that all aspects of industrial concentration should discourage entry. This positive effect is explained on the basis of various empirical findings showing that share dispersion alleviates incumbents’ rivalry and reduces entry-deterrent investments such as advertising and innovation. Finally, it is shown that the Herfindahl index may be insufficient to control for share dispersion. Copyright International Atlantic Economic Society 2015

Suggested Citation

  • George Geronikolaou, 2015. "On the Effect of Market Share Dispersion on New Firm Entry," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 287-298, August.
  • Handle: RePEc:kap:iaecre:v:21:y:2015:i:3:p:287-298:10.1007/s11294-015-9533-0
    DOI: 10.1007/s11294-015-9533-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Herfindahl index; Industrial concentration; Market share dispersion; Firm entry; L1; L11;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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