Number Of Entrants Research Articles

Does Regulation Drive Market Competition? Evidence from the Spanish Local TV Industry

Although we have many tools to understand the effect of regulation on firm entry, we know little about the importance of actual regulation enforcement. For this purpose, this paper uses data from Spain's local television industry from 1995 through 2001, which provide a unique opportunity for examining how firms' profitability changes with the introduction of regulation and a posterior liberalization. During this period, the local television industry transitioned from a state of alegality (no regulation in place) to being highly regulated and finally to being informally deregulated. Using a firm entry model from Bresnahan and Reiss (1990, 1991a,b), we estimate local TV station entry thresholds by number of entrants across years. We find the entry threshold in 1998 increased relative to the thresholds in 1995 and 2001, suggesting that entry was less attractive during the period when the local TV industry was highly regulated. We decompose the entry thresholds into the fixed costs and variable profits, and find the fixed-cost ratios increase in 1998 and stay constant in 2001. Meanwhile, we find an increase in the variable-profit ratios in 2001. These findings suggest that the informal deregulation did not invalidate the regulation introduced in 1995 on the cost side. However, the deregulation seemed to have an impact on variable profits through how local TV stations competed.

Access Charges, Vertical Separation, and Lobbying

We examine how vertical separation affects the lobbying activities for the access charge of essential facilities. First, when investigating a model where the number of new entrants is fixed, we find that vertical separation either increases or decreases the access charge, and that this depends on the relative efficiency between the incumbent and the new entrants, and the number of entrants. Second, when investigating a free-entry market, we find that vertical separation always reduces the access charge in such a market. The vertically integrated firm has a stronger incentive to lobby in this market because a higher access charge reduces the number of competitors.

Editorial: And Now for Something (Completely) Different

Editorial: And Now for Something (Completely) Different

Les Chinois au Royaume-Uni, ou l'illusion de l'immigration choisie

Ethnographic research conducted in both China and the United Kingdom shows that the public policy of the British state in the area of immigration is not a rigid constraint externally imposed on migrants. On the contrary, it is incorporated by the latter into their strategies, which leads them to migratory, employment and survival practices that produce the social phenomena (false asylum claims, illegal work, etc.) against which the aforementioned public policy claims to act. Far from reflecting the individual qualities possessed by a given candidate for migration, moreover, screening criteria (legal residence, educational background and so on) are merely administrative statuses supplied to clients by professionals in China and the United Kingdom in exchange for hard cash. Official rhetoric concerning “selective” migration only results in limiting the number of entrants, with no effect on their “quality”. Finally, it turns out that Chinese immigration to the United Kingdom tends to leave the ethnic sector and enter a “neo-proletarian” sector that plays a transitional role on the road to integration into the mainstream labor market, although conditions are sometimes more difficult for employees there. ■

Internet retail banking

PurposeThe purpose of this paper is to examine the online retail banking industry and determine if there is evidence that online banking will be a dominant player in the financial services retail marketplace.Design/methodology/approachAn analysis of 22 banks is conducted and it is determined that the barriers to entry that are identified may not be enough to prohibit a substantial number of entrants into the marketplace.FindingsUsing Porter's five‐force model to conduct the industry analysis; online banking is still in its infancy, although with great potential. According to FDIC, while approximately 40 percent of the 10,623 banks and thrifts in the US market have a website, only 376 offer transactional internet banking at the time of the study. About 30 internet‐only banks or a pure‐play format operate in the USA. All of the web‐only banks in the USA combined have about 250,000 depositors, out of the nearly six million customers who have stated that they do significant banking activities over the internet.Practical implicationsOwing to the different types of potential suppliers, the suppliers in the online‐banking industry do not appear to have as big a bargaining power in this industry as they would in another industry. Buyers, however, hold the keys to success in the online‐banking industry. Buyers do not need the product that is offered due to the many substitute products available in the market.Originality/valueIn the end, the rivalries among banks lead them to differentiating their internet banking products which is what will afford one bank to have a competitive advantage over the rest of the market.

Innovation, Entry into Multiple Markets and Unobserved Heterogeneity

This paper considers an experimental market entry game, where the decision problem involves several heterogeneous markets and players have an opportunity to enter several markets simultaneously. We find that groups fail to coordinate on any of the multiple pure strategy Nash equilibria by exhibiting excess entry in the majority of rounds. The likelihood of overentry depends on the market capacity and characteristics of the experimental markets. We also find that, on average, the behavior of the individual participants can be reconciled with the mixed strategy equilibrium prediction. Yet, this prediction fails to account for the differences in the individual profiles. By conducting an econometric estimation that accounts for the unobserved heterogeneity, we show that market capacity, expectations about the number of entrants, the amount of payoff from the previous period and the history of over- or underentry have significant impact on the individual action choice.

Do industrial policy reforms reduce entry barriers? Evidence from Indian manufacturing industries

Institutional regulations by licensing and capacity restrictions are often considered as barriers to competition in Indian industry. As most of these regulations have given way to market mechanisms, an increase in the number of entrants is to be expected. This paper attempts to measure the extent of barriers to entry in Indian manufacturing industries by quantifying the height of barriers for 1991/92 and, a decade after the onset of reforms, 2001/02. We find that, contrary to expectations, the height of overall barriers increased. This suggests that dismantling of commands and controls intended to ease entry seems to have paved the way for the erection and strengthening of market barriers to entry.

Market Entry Decisions

In a market entry game, the number of entrants usually approaches game-theoretic equilibrium quickly, but in real-world markets business start-ups typically exceed market capacity, resulting in chronically high failure rates and suboptimal industry profits. Excessive entry has been attributed to overconfidence arising when expected payoffs depend partly on skill. In an experimental test of this hypothesis, 96 participants played 24 rounds of a market entry game, with expected payoffs dependent partly on skill on half the rounds, after their confidence was manipulated and measured. The results provide direct support for the hypothesis that high levels of confidence are largely responsible for excessive entry, and they suggest that absolute confidence, independent of interpersonal comparison, rather than confidence about one's abilities relative to others, drives excessive entry decisions when skill is involved.

The Shortage of Science Teachers

Science deserves plaudits for focusing on the crisis in science education resulting from the lack of properly qualified K-12 teachers in the nation's public schools (News Focus Special: Preparing Teachers, 1 June, pp. 1270-1279). Calling attention to efforts in several states to engage research universities will hopefully begin to address the problem. Unfortunately, the supply side of this issue is only one of several critical, interacting elements of a complex sociopolitical system that is typically controlled or redesigned one element at a time. Focusing only on the supply side is a losing strategy. Let me give examples from California, with which I am most familiar. If all the graduates of California's public universities who have majored in math in a given year became credentialed teachers in the state, the numbers would still fall short of the projected demand for math teachers in the decade ahead. A second major problem is teacher retention, particularly in hard-to-staff, low-performing schools where “working conditions” are a major factor and where underprepared teachers are predominantly located ([1][1]). Teacher attrition in the first 1 to 4 years diminishes the importance placed on increasing the number of entrants ([2][2]). The typical explanation for this phenomenon that a teacher would give is that it stems from the loss of professional status in the teaching profession as a consequence of overemphasis on testing and rigid adherence to standards-based instruction. Teachers no longer enjoy the privilege of controlling delivery of curricula and thus acting as professionals, i.e., exercising judgment in the conduct of their classes. ![Figure][3] CREDIT: GETTYIMAGES.COM Finally, teachers with whom I have worked value time above compensation. No university administration expects its faculty to spend the entire day standing in front of a class. Teachers in K-12 need time for collegial activity and professional development to discuss content and pedagogy and, above all, to reduce the sense of isolation that dominates their lives. As an engineering scholar, it is painfully clear to me that the public educational system will never function properly until policy and practice are consonant with a properly designed, controlled, and resourced system. As long as policy-makers continue to tinker with only selected parts of the problem, the “Gathering Storm” will continue to gain energy. If K-12 were an airplane, it never would have taken off. 1. 1.[↵][4] The Status of the Teaching Profession 2005 (The Center for the Future of Teaching and Learning, Santa Cruz, CA, 2005), pp. 82-84. 2. 2.[↵][5] California Postsecondary Education Commission, Winter 2006 Request for Proposals, Retention of Math and Science Teachers, footnote, p. 3. [1]: #ref-1 [2]: #ref-2 [3]: pending:yes [4]: #xref-ref-1-1 View reference 1. in text [5]: #xref-ref-2-1 View reference 2. in text

Endogenous entry and self-selection in private value auctions: An experimental study

This paper presents the results of an experimental study of endogenous entry in first-price independent private value auctions. N potential bidders simultaneously decide whether to participate in an auction or receive a known outside option. In the second stage, entrants submit bids after learning their own private values and the number of entrants. An equilibrium model of heterogeneous risk averse bidders implies a self-selection effect, where bidding in the auction is lower with endogenous entry because only less risk averse bidders enter. This effect is confirmed by the experiment. We also observe excessive entry relative to the theoretical model.

A Gap for Me: Entrepreneurs and Entry

We present a theory of entrepreneurial entry (and exit) decisions. Knowing their own managerial talent, entrepreneurs decide which market to enter, where markets differ in size. We obtain a striking sorting result: Each entrant in a large market is more efficient than any entrepreneur in a smaller market because competition is endogenously more intense in larger markets. This result continues to hold when entrepreneurs can export their output to other markets, thereby incurring a unit transport cost or tariff. The sorting and price competition effects imply that the number of entrants (and hence product variety) may actually be smaller in larger markets. In the stochastic dynamic extension of the model, we show that the churning rate of entrepreneurs is higher in larger markets.

A Gap for Me: Entrepreneurs and Entry, Second Version

We present a theory of entrepreneurial entry and exit decisions. Knowing their own managerial talent, entrepreneurs decide which market to enter, where markets differ in size. We obtain a striking sorting result: each entrant in a large market is more efficient than any entrepreneur in a smaller market since competition is endogenously more intense in larger markets. This result continues to hold when entrepreneurs can export their output to other markets, thereby incurring a unit transport cost or tariff. The sorting and price competition effects imply that the number of entrants (and hence product variety) may actually be smaller in larger markets. In the stochastic dynamic extension of the model, we show that the churning rate of entrepreneurs is higher in larger markets.

Seeking Lobbying Rents

Combining rent-seeking and menu auction models allows the study of efficiency in a political economy where lobbying creates rents that politicians expend resources to obtain. Policy choices, lobbying, and rent-seeking are determined endogenously. When all interests lobby, equilibrium local public good provision and rents do not depend on who achieves office. Having only a fixed cost of rent-seeking replicates citizen candidate results. Generalizing the model, so additional expenditures have effect, reduces entrants and rent-seeking costs. Even when entry would suggest full rent dissipation, the small number of entrants to political contests gives rise to less.

HAMMETT ET AL. RESPOND

Hirshon and Wilson raise important questions about the statistical methodology underlying part of our approach to estimating the burden of infectious disease among inmates and releasees. Our approach involved estimating the number of unique individuals who entered jails during a given year. Given the rapid turnover of jail populations, we assumed that the number of entrants would be roughly equivalent to the number of releasees. Although the total number of entries is countable, the number of unique individuals who entered had to be inferred from arrest data. For that purpose, we assumed and estimated a stochastic model (using a negative binomial regression) of the arrest process and used it to infer that each person who entered jail at least once during a year in fact entered, on average, about 1.38 times that year. Hirshon and Wilson question the use of a negative binomial regression for generating this estimate. Researchers frequently use the Poisson and negative binomial distributions to model arrest histories.1 This is partly a matter of convenience, because those distributions are especially tractable in the study of repeated events, but also because those distributions seem to fit arrest data particularly well. Furthermore, both the Poisson and negative binomial models give consistent estimates, provided the mean function is correctly specified, even when the maintained distribution is false.2 Hirshon and Wilson should rest assured that our estimates are reasonably robust with respect to distributional assumptions about the arrest process. We were more concerned about data quality than about statistical modeling. A reader should take the estimated arrest (and, by inference, release) rate as a rough approximation of the true rate. A recent report, not available at the time we wrote our article, explains the intricacies of using a negative binomial model to estimate arrest rates using samples collected at booking facilities (Rhodes W, Kling R, “Estimating prevalence of hard to reach populations,” unpublished paper, 2002). Using probability-based survey data from 35 counties, that report provides statistics leading to a consensus adjustment of 1.42 arrests per year for chronic drug users. Had we used that consensus adjustment in place of the 1.38 used in our article, our estimates of the burden of infectious disease would have been only about 3% lower. This is probably a lower limit, because chronic drug users have comparatively high arrest rates. On the other hand, had we assumed that every arrestee (and by inference, every releasee) was a unique individual, our estimates of the burden of infectious diseases among inmates would have been about 38% higher, but surely this is an unrealistic upper limit, because many people cycle repeatedly through jails. In sum, any errors resulting from use of the negative binomial distribution to model the arrest process are unlikely to have a material effect on the conclusions reached in our article.

A Gap for Me: Entrepreneurs and Entry

We present a theory of entrepreneurial entry and exit decisions. Knowing their own managerial talent, entrepreneurs decide which market to enter, where markets differ in size. We obtain a striking sorting result: each entrant in a large market is more efficient than any entrepreneur in a smaller market. The result obtains since competition is endogenously more intense in larger markets. The sorting and price competition effects imply that the number of entrants (and hence product variety) may actually be smaller in larger markets. In the stochastic dynamic extension of the model, we show that the churning rate of entrepreneurs is higher in larger markets.

Entry coordination in auctions and social welfare: An experimental investigation

Most of the literature on auctions with endogenous entry assumes that, in equilibrium, the number of entrants is deterministic. We discuss a series of experiments designed to test the alternative hypothesis that, even in equilibrium, the number of entrants is stochastic. This distinction has strong implications for auction performance, the design of optimal mechanisms, and social welfare. Our results strongly reject the hypothesis of deterministic entry and tend to confirm the alternative hypothesis that entry is stochastic.

Dynamic analysis of the evolution of the number of medical specialists in the Spanish Health System

The evolution of the number of medical specialists in the Spanish Health System has been and continues to be determined by various factors. Among them, it is worth pointing out the lack of restrictive policies on the number of entrants into colleges of medicine, as well as the scarcity of studies analysing the profile of physicians required in the future or defining their sphere of professional activity. The imbalance between health professionals entering into and departing from the system has resulted in an increase in the number of physicians in Spain. In this article, we will show a projection of the number of medical specialists, by their specialties, for the years ahead.

Vertical technology transfer via international outsourcing

To analyze the effect of vertical technology transfer on industrial development in lesser developed countries (LDCs), we develop a model in which the technology transferred to an LDC supplier by a developed country (DC) importer can diffuse to other LDC firms. Surprisingly, even if such diffusion in the LDC market leads to entry into the DC market, it can benefit both the initial DC importer and its initial LDC supplier by reducing the double marginalization problem. This effect does not depend upon whether firms compete in prices or quantities and exists even when the number of entrants into each market is endogenously determined.

Elicitation of strategy profiles in large group coordination games

The strategy method is an experimental procedure for eliciting a complete strategy of play for all information sets, not only the ones that happen to be reached during the course of a play of a game. We use it to elicit individual strategy profiles for a class of large group, market entry games in which the payoff for a player who enters on a given market capacity value decreases linearly in the difference between the capacity value and the corresponding number of entrants. Our results show that the aggregate frequencies of entry do not differ from previous results obtained under the more common decision method. Under both methods, the number of entrants across a large set of market capacity values is organized remarkably well by the equilibrium solution. In contrast, theindividual profiles do not support mixed equilibrium play; only three of the sixty profiles suggest attempts at randomization or “mixing” between periods. About half of the individual profiles appear to converge, albeit slowly, to cutoff decision policies and more than a quarter of the profiles exhibit a variety of patterns that defy classification.

Uncertainty and the size distribution of rewards from innovation

Previous research has shown that the distribution of profit outcomes from technological innovations is highly skew. This paper builds upon those detailed findings to ask: what stochastic processes can plausibly be inferred to have generated the observed distributions? After reviewing the evidence, this paper reports on several stochastic model simulations, including a pure Gibrat random walk with monthly changes approximating those observed for high-technology startup company stocks and a more richly specified model blending internal and external market uncertainties. The most highly specified simulations suggest that the set of profit potentials tapped by innovators is itself skew-distributed and that the number of entrants into innovation races is more likely to be independent of market size than stochastically dependent upon it.