Abstract
The aim of this paper is to evaluate the welfare improvement effect of public financing measure for farm inn by use of the two-stage entry model. The excess entry theorem has shown that the number of firms in a oligopoly industry is excessive. The cause of oligopoly is the presence of fixed cost. When fixed cost is decreased, the loss of welfare is decreased. We apply this model for farm inn in Miyama Town. The result is that when interest rate is decremented from 4% to 2.1%, the loss of social welfare is decremented from 6.09% to 5.89%.
