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Delivery in the city: evidence on monopolistic competition from New York restaurants

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  • Cosman, Jacob
  • Schiff, Nathan

Abstract

We examine the response to entry in a large market with differentiated products using a novel longitudinal dataset of over 550,000 New York City restaurant menus from 68 consecutive weeks. We compare “treated” restaurants facing a nearby entrant to “control” restaurants with no new competition, matching restaurants using location characteristics and a pairwise distance measure based on menu text. Restaurants frequently adjust prices and product offerings, but we find no evidence that they respond differentially to new competition. However, restaurants in the top entry decile are 5% more likely to exit after a year than restaurants in the lowest entry decile.

Suggested Citation

  • Cosman, Jacob & Schiff, Nathan, 2019. "Delivery in the city: evidence on monopolistic competition from New York restaurants," MPRA Paper 96617, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:96617
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    1. Schäfers, Sebastian, 2022. "Product Lotteries and Loss Aversion," Working papers 2022/06, Faculty of Business and Economics - University of Basel.

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    More about this item

    Keywords

    spatial competition; monopolistic competition; product differentiation; entry;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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