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Empirical analysis of markets with free and restricted entry

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  • Ferrari, Stijn
  • Verboven, Frank

Abstract

Empirical entry models provide a fruitful framework to analyze many interesting questions in Industrial Organization. We show how empirical models of free entry can be extended to allow for various kinds of entry restrictions. We first consider a model of regulated entry and a model of monopoly or coordinated entry as alternatives to the free entry model. We then introduce a model that combines elements of both free and coordinated entry. This model describes how an upstream firm may find it optimal to restrict dowstream entry in some markets while allowing for free entry in other markets. The discussion shows how uncovering fixed costs from these alternative entry models is parallel to uncovering marginal costs from alternative oligopoly models of pricing or output behavior. To allow for clear comparisons, we focus on market-level entry models.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:indorg:v:28:y:2010:i:4:p:403-406
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    References listed on IDEAS

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    Cited by:

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    4. Davide Fortin, 2024. "Legalizing cannabis in Colorado: Displacement or market expansion?," French Stata Users' Group Meetings 2024 03, Stata Users Group.
    5. An-Hsiang Liu & Ralph Siebert, 2020. "The Competitive Effects of Declining Entry Costs over Time: Evidence from the Static Random Access Memory Market," CESifo Working Paper Series 8552, CESifo.
    6. 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.
    7. Nikogosian, Vigen & Weigand, Jürgen, 2012. "Forward integration and market entry: Evidence from natural gas markets for household customers in Germany," ZEW Discussion Papers 12-062, ZEW - Leibniz Centre for European Economic Research.
    8. Castellari Elena & Bonanno Alessandro & Sckokai Paolo, 2019. "Food Retail Liberalization, Food Retail Structure and Food Prices: The Italian Case," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 17(2), pages 1-11, November.
    9. Liu, An-Hsiang & Siebert, Ralph B., 2022. "The competitive effects of declining entry costs over time: Evidence from the static random access memory market," International Journal of Industrial Organization, Elsevier, vol. 80(C).
    10. Nikogosian, Vigen & Veith, Tobias, 2011. "Strategic pricing, market entry and competition: Evidence from German electricity submarkets," ZEW Discussion Papers 11-068, ZEW - Leibniz Centre for European Economic Research.

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