Business Economics and Public Policy Papers

Document Type

Working Paper

Date of this Version

9-2006

Publication Source

The RAND Journal of Economics

Volume

37

Issue

3

Start Page

619

Last Page

640

DOI

10.1111/j.1756-2171.2006.tb00034.x

Abstract

I describe a model of entry with endogenous product-type choices. These choices are formalized as the outcomes of a game of incomplete information in which rivals' differentiated products have nonuniform competitive effects on profits. I estimate the model for location choices in the video retail industry using a nested fixed-point algorithm solution. The results imply significant returns to product differentiation. Simulations illustrate the tradeoff between demand and intensified competition and the extent to which markets with more scope for differentiation support greater entry.

Copyright/Permission Statement

This is the peer reviewed version of the following article: Katja Seim (2006), An empirical model of firm entry with endogenous product-type choices, The Rand Journal of Economics, 37 (3), 619 which has been published in final form at http://dx.doi.org/10.1111/j.1756-2171.2006.tb00034.x . This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving: http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms.

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Date Posted: 27 November 2017

This document has been peer reviewed.