This article develops a methodology to test alternative oligopoly models and to analyze the effects of entry restrictions on conduct. This methodology is applied to the Uruguayan banking sector, whose legal entry barriers were significantly relaxed during the late 1970s. The results are consistent with a von Stackelberg type of industry where the degree of oligopolistic interaction among the leading firms is reduced as a consequence of the relaxation of the legal entry barriers.
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Spiller et al. (1984) studied this question.
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