Market size and competition: A “hump-shaped” result

Volume: 70, Pages: 102605 - 102605
Published: May 1, 2020
Abstract
An active empirical literature estimates entry threshold ratios (ETRs), introduced by Bresnahan and Reiss (1991), to learn about the impact of firm entry on competition. We show that in the standard homogeneous goods oligopoly model, there is no monotonic relationship with the price-cost margin, one measure for the strength of competition. Regardless of the shape of demand, the ETR is hump-shaped in the number of active firms. It can also...
Paper Details
Title
Market size and competition: A “hump-shaped” result
Published Date
May 1, 2020
Volume
70
Pages
102605 - 102605
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