ENTRY AND COMPETITION IN DIFFERENTIATED PRODUCTS MARKETS

• 成果类型: Article
• 署名作者: Schaumans, Catherine; Verboven, Frank
• 署名单位: Tilburg University; Tilburg University; KU Leuven; Centre for Economic Policy Research - UK
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/REST_a_00440
• 发表日期: 2015-03
• 页码: 195-209
• 关键词: industry; FIRMS; price; MODEL; size; cost

摘要

We propose a methodology for estimating the competition effects from entry when firms sell differentiated products. We first derive precise conditions under which Bresnahan and Reiss's entry threshold ratios (ETRs) can be used to measure competition effects. We then augment the traditional entry model with a revenue equation. This serves to adjust the ETRs by the extent of market expansion from entry, giving unbiased estimates of the competition effects. We apply our approach to seven local service sectors. We find that entry typically leads to significant market expansion, implying that traditional ETRs may substantially underestimate the competition effects from entry.