Competition in Local Markets: Some Evidence from the Spanish Retail Banking Market

Competition in Local Markets: Some Evidence from the Spanish Retail Banking Market Using the entry threshold concept developed by Bresnahan and Reiss (Brookings Pap Econ Act 3:833–882, 1987), this paper examines how competitive conditions vary in independent local banking markets when the number of depository branches grows. With data on the Spanish retail banking sector in 2003, I estimate a discrete choice model to calculate the entry thresholds. The empirical evidence suggests that the entry of a new branch implies competition on a local level. Local branches seem to have some scope for changing prices fixed on national and regional levels. Moreover, the entry of new branches increases the competition among branches with instruments other than price (e.g., advertising, location, and promotion). Review of Industrial Organization Springer Journals

Competition in Local Markets: Some Evidence from the Spanish Retail Banking Market

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Springer US
Copyright © 2008 by Springer Science+Business Media, LLC.
Economics; Industrial Organization; Microeconomics
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