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may be too much or too little entry. One way to think about this problem is in
terms of the externalities associated with entry. Whenever a new firm considers en-
tering the market with a new product,buy cheap true religion jeans (http://truecheapreligion.com/), it considers only the profit it would make.
Yet its entry would also have two external effects:
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N The product-variety externality: Because consumers get some consumer surplus
from the introduction of a new product,chi flat iron limited edition (http://www.chihairflat.com/), entry of a new firm conveys a
positive externality on consumers.
N The business-stealing externality: Because other firms lose customers and