TY  - BOOK
AU  - Campbell,Jeffrey R.
ED  - National Bureau of Economic Research.
TI  - Competition in Large Markets
T2  - NBER working paper series
PY  - 2005///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - December 2005; Hardcopy version available to institutional subscribers
N2  - This paper develops a simple and robust implication of free entry followed by competition without substantial strategic interactions: Increasing the number of consumers leaves the distributions of producers' prices and other choices unchanged. In many models featuring non-trivial strategic considerations, producers' prices fall as their numbers increase. Hence, examining the relationship between market size and producers' actions provides a nonparametric tool for empirically discriminating between these distinct approaches to competition. To illustrate its application, I examine observations of restaurants' seating capacities, exit decisions, and prices from 224 U.S. cities. Given factor prices and demographic variables, increasing a city's size increases restaurants' capacities, decreases their exit rate, and decreases their prices. These results suggest that strategic considerations lie at the heart of restaurant pricing and turnover
UR  - https://www.nber.org/papers/w11847
UR  - http://dx.doi.org/10.3386/w11847
ER  -