Institutional barriers to entry were removed to a considerable extent in 1996 in the dutch retail sector to enhance market dynamics. Three years before that the regulator decided to not take legal actions anymore against entrants violating institutional requirements. In the current analysis we investigate the effects of the deregulation during that 1993–1995 period using a recently developed model by carree and thurik (1999). The results show that the equilibrium number of firms and the adjustment speed from the disequilibrium number of firms to the equilibrium number have both increased. The results also show that the increase in the speed of adjustment is the consequence of lowering barriers to entry.