Working Paper No. 984

Entry Regulations, Product Differentiation and Determinants of Market Structure

Published: October 11, 2013, revised July 2014Pages: 55Keywords: Imperfect competition; Product differentiation; Retail markets; Entry; Exit; Sunk costsJEL-codes: L11; L13; L81

Entry Regulations, Product Differentiation and Determinants of Market Structure Florin Maican and Matilda Orth

We use a dynamic oligopoly model of entry and exit to evaluate how entry regulations affect profitability and market structure in retail. The model incorporates demand and store-level heterogeneity. Based on unique data for all retail food stores in Sweden, we find that the average entry costs for small and large stores are 10 and 18 percent lower, respectively, in markets with liberal compared with restrictive regulations. Counterfactual simulations show that lower entry costs in restrictive markets result in higher entry rates and allow us to quantify the consequences of regulations in light of trade-offs between small and large stores.

Matilda Orth


Ph: +46 8 665 45 31
Mob: +46 73 642 3824

Florin Maican


Ph: +46 31 786 4866
Mob: +46 76 235 3039

Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

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In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


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