The aim of this paper is to analyse the effects of the entry of new branches on local market conduct. To do this, I use the concept of entry threshold suggested by Bresnahan and Reiss (1987). With data on the Spanish retail banking sector for the year 1998, I specify and estimate a discrete choice model to examine the probabilities of observing a determined number of branches in each local market. I find that in single submarket towns (local markets) the entities (banks and savings banks) do not compete in prices, but they do compete in other aspects (i.e., advertising, location).

Key words: independent local markets, entry threshold, branches.
JEL classification: D40; L11; G21; C25.