Entry and Exit in Local Service Industries : Evidence from the U.S. Bars Industry

There has been few studies on competition and entry of firms in local service industries. I apply Bresnahan and Reiss (1991)'s entry threshold model to study competition in the U.S. bar industry, by linking market size and the number of bars in each local market. I find that entry of each additional bar increases competition; entry into a duopoly market intensifies competition the most. Further investigation attributes this observed pattern to location differentiation