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An empirical model of firm entry with endogenous product-type choices
Open accessAbstract
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.
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Cites
A New Approach to Consumer Theory
Lancaster, K. J. (1966) · Journal of Political Economy · doi:10.1086/259131 · Cited by 8,471
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Bid Preference Programs and Participation in Highway Procurement Auctions
Krasnokutskaya, E., & Seim, K. (2011) · American Economic Review · doi:10.1257/aer.101.6.2653 · Cited by 300
Self-citationCoordination versus differentiation in a standards war: 56K modems
Augereau, A., Greenstein, S., & Rysman, M. (2006) · The RAND Journal of Economics · doi:10.1111/j.1756-2171.2006.tb00062.x · Cited by 114
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Goldberg, S., & Lam, H. T. (2025) · doi:10.2139/ssrn.5152649 · Cited by 2
Metadata
- Authors
- Seim, K.
- Venue
- The RAND Journal of Economics
- Publisher
- Wiley
- Published
- 2006-09
- Volume
- 37
- Issue
- 3
- Pages
- 619-640
- ISSN
- 0741-6261 (ISSN-L)
- 1756-2171
- OpenAlex
- W1975555673
- Cited by
- 655
- References
- 1
- FWCI
- 87.60
- Type
- journal article
- Language
- en
- Open access
- green
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Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.