TY - JOUR
T1 - Entry, exit, and the determinants of market structure
AU - Dunne, Timothy
AU - Klimek, Shawn D.
AU - Roberts, Mark J.
AU - Xu, Daniel Yi
PY - 2013/9
Y1 - 2013/9
N2 - This article estimates a dynamic, structural model of entry and exit for two US service industries: dentists and chiropractors. Entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are important determinants of long-run firm values, firm turnover, and market structure. In the dentist industry entry costs were subsidized in geographic markets designated as Health Professional Shortage Areas (HPSA) and the estimated mean entry cost is 11 percent lower in these markets. Using simulations, we find that entry cost subsidies are less expensive per additional firm than fixed cost subsidies.
AB - This article estimates a dynamic, structural model of entry and exit for two US service industries: dentists and chiropractors. Entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are important determinants of long-run firm values, firm turnover, and market structure. In the dentist industry entry costs were subsidized in geographic markets designated as Health Professional Shortage Areas (HPSA) and the estimated mean entry cost is 11 percent lower in these markets. Using simulations, we find that entry cost subsidies are less expensive per additional firm than fixed cost subsidies.
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U2 - 10.1111/1756-2171.12027
DO - 10.1111/1756-2171.12027
M3 - Article
AN - SCOPUS:84889641683
SN - 0741-6261
VL - 44
SP - 462
EP - 487
JO - RAND Journal of Economics
JF - RAND Journal of Economics
IS - 3
ER -