Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This paper empirically tests whether capacity is used to deter entry and whether the amount invested in entry‐deterring capacity is related to market concentration and market presence. We use a unique dataset containing 3,830 lodging properties in Texas from 1991 through 1997. We find that there is higher investment in capacity relative to demand (i.e., idle capacity) in markets with a larger Herfindahl index and by firms with a larger share of market capacity. These results are consistent with the entry deterrence literature that suggests firms in more concentrated markets and firms with a larger market share have greater incentive to invest in entry‐deterring capacity.