2013/09/01 by Timothy Dunne, Shawn D. Klimek, Mark J. Roberts +1 · 1 citation
Business, Management and Accounting · Economics, Econometrics and Finance · #Consumer Market Behavior and Pricing #Firm Innovation and Growth #Merger and Competition Analysis
paper · doi:10.1111/1756-2171.12027
openalex publication_date 2013/09/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/15
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.