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Entry Regulations, Welfare, And Determinants Of Market Structure

Author

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  • Florin G. Maican
  • Matilda Orth

Abstract

Welfare effects of entry regulations are theoretically ambiguous in differentiated product markets. We use a dynamic oligopoly model of entry and exit with store†type differentiation and static price setting to evaluate how entry regulations affect long†run 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.

Suggested Citation

  • Florin G. Maican & Matilda Orth, 2018. "Entry Regulations, Welfare, And Determinants Of Market Structure," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(2), pages 727-756, May.
  • Handle: RePEc:wly:iecrev:v:59:y:2018:i:2:p:727-756
    DOI: 10.1111/iere.12286
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    Cited by:

    1. Varela, Mauricio J., 2018. "The costs of growth: Accelerated growth and crowd-out in the Mexican supermarket industry," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 1-52.
    2. Lucia Rizzica & Giacomo Roma & Gabriele Rovigatti, 2020. "The effects of shop opening hours deregulation: evidence from Italy," Temi di discussione (Economic working papers) 1281, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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