Wednesday, April 29, 2020

Delivery in the city: evidence on monopolistic competition from New York restaurants

By: Cosman, JacobSchiff, Nathan
Abstract: We examine the response to entry in a large market with differentiated products using a novel longitudinal dataset of over 550,000 New York City restaurant menus from 68 consecutive weeks. We compare “treated” restaurants facing a nearby entrant to “control” restaurants with no new competition, matching restaurants using location characteristics and a pairwise distance measure based on menu text. Restaurants frequently adjust prices and product offerings, but we find no evidence that they respond differentially to new competition. However, restaurants in the top entry decile are 5% more likely to exit after a year than restaurants in the lowest entry decile.

https://lawprofessors.typepad.com/antitrustprof_blog/2020/04/delivery-in-the-city-evidence-on-monopolistic-competition-from-new-york-restaurants.html

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