Intensity of Competition and Market Structure in the Italian Banking Industry

C. Giannetti

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Abstract

This work tests the predictions of Sutton’s model of independent submarkets for the Italian retail banking industry. In the first part of this paper, I develop a model of endogenous mergers to evidence the relationship between firms’ conduct, market entry and market structure. In the second part, I identify the submarket dimension and estimate the relationship between market size and market structure using data on bank branches. The size of the submarkets turned out to be at most provincial whereas the limiting concentration index - as argued by Sutton for industries with exogenous sunk costs - goes to zero as the market becomes larger.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages34
Volume2008-43
Publication statusPublished - 2008

Publication series

NameCentER Discussion Paper
Volume2008-43

Keywords

  • Concentration
  • Truncated Poisson and Negative Binomial models
  • quantile regressions

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  • Cite this

    Giannetti, C. (2008). Intensity of Competition and Market Structure in the Italian Banking Industry. (CentER Discussion Paper; Vol. 2008-43). Finance.