This paper analyses the relation between competition and concentration in the banking sector. The empirical answer is given by testing a monopolistic competition model of bank branching behaviour on individual bank data at county level (départements and provinces) in France and Italy. We...

This paper analyses the relation between competition and concentration in a monopolistic competition model where banks compete in branching and interest rates and market structure is endogenous. The model is applied on individual bank data in Italy and France using a maximum likelihood approach...