Entry, exit, and the determinants of market structure

Journal Article (Journal Article)

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. © 2013, RAND.

Full Text

Duke Authors

Cited Authors

  • Dunne, T; Klimek, SD; Roberts, MJ; Xu, DY

Published Date

  • September 1, 2013

Published In

Volume / Issue

  • 44 / 3

Start / End Page

  • 462 - 487

Electronic International Standard Serial Number (EISSN)

  • 1756-2171

International Standard Serial Number (ISSN)

  • 0741-6261

Digital Object Identifier (DOI)

  • 10.1111/1756-2171.12027

Citation Source

  • Scopus