Elsevier

Journal of Econometrics

Volume 30, Issues 1–2, October–November 1985, Pages 459-471
Journal of Econometrics

Entry and empirical demand and supply analysis for competitive industries

https://doi.org/10.1016/0304-4076(85)90151-4Get rights and content

Abstract

Since many theoretical and empirical models of competitive industries do not take appropriate account of entry, several deterministic demand, supply and entry (DSE) models are formulated and analyzed. The supply equation in these models is derived assuming profit maximization, identical production functions and competitive conditions for producer. Models are solved to yield equilibrium price, output, and number of producers and properties of solutions are analyzed. Annual data for the Canadian household furniture industry are employed to investigate and estimate various forms of supply and entry equations.

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A preliminary version of this paper was presented at the Conference on New Approaches to Modeling, Specification Selection, and Econometric Inference, University of Texas at Austin, May 10–11, 1984. We thank the participants and the Journal's referees for several helpful comments. Research financed in part by the National Science Foundation and by income from the H.G.B. Alexander Endowment Fund, Graduate School of Business, University of Chicago

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