Abstract
We study the direct and indirect effects of randomized entry into local service industries. We implement a three-step design, randomizing the entry of new retail mobile money vendors — drawn from existing microenterprises retailing other services across independent, distinct low-income localities in Ghana. We report preliminary evidence of (i) mixed business stealing and market expansion in sector A: mobile money, and (ii) market expansion in sector B: microenterprises. Yet, local industry revenues and profits increased overall, suggesting positive externalities on microenterprises and producer surplus. Randomized entry increases both firm conduct and service quality and decreases prices, suggesting positive consumer surplus. These effects are not only important for welfare and policy but are key ingredients for advancing basic and applied knowledge on firm entry in industry equilibrium.
