A structural model of entry and fiscal policy is presented. It shows that taxation of variable production costs can increase product prices, lower competition, and reduce the availability of new products in small markets. The model's test is based on a unique nationwide fiscal experiment. We...

Barriers to entry are regarded as major impediments to the working of markets. Entry must not necessarily actually take place - the perceived threat of entry may encourage incumbent firms to behave as if they are in a competitive market, even if they are not. We present empirical evidence on...

A structural model of entry and fiscal policy is presented. It shows that taxation of variable production costs can increase product prices, lower competition, and reduce the availability of new products in small markets. Existing theoretical models of entry and taxation either assume imperfect...

Because of its unique institutional and regulatory features, the generic drug industry provides a useful laboratory for understanding how competition evolves within a market. We exploit these features to estimate a system of structural relationships in this industry, including the relationship...