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Abstract

We investigate changes in competition in the Dutch notary profession after a partial deregulation of the market for notary services enforced by the 1999 Dutch Notary Act. This reform liberalized prices and relieved many entry barriers in the profession, while keeping the professional standard in place. We use the concept of entry thresholds developed by Bresnahan and Reiss (1991) to infer on the effect of entry on competition before and after the regulatory reform. We find that entry affects conduct in the Dutch notary profession as a second notary office in a market requires a much larger market size than a monopoly office to be profitable, suggesting that profit margins drop with entry. Yet, we find no significant differences between entry thresholds ratios before and after the regulatory reform.Wediscuss potential explanations for the sluggishness of entry in the profession and implications for policy.

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