Abstract: This paper presents a model of entry with endogenous product-type choices. These choices are form= alized as the outcomes of a game of incomplete information in which rivals' differentiated products have non-uniform competitive effects on firms' prof= its. The model is estimated for location choices in t= he video retail industry using a nested fixed-point algorithm solution. The results imply significant payoffs to product differentiation. Simulations illustrate the tradeoff between demand and intensified competition and the extent to which markets with larger product spaces, and thus more scope for differentiation, support greater entry.