A Firm Entry Approach to Religious Pluralism and Religious Participation

There are two competing theories regarding the effect of religious pluralism on participation. One argument (Sacred Canopy) is that increased religious diversity will decrease individuals' beliefs and participation. The other case (Religious Economies) is that increased religious competition will increase interest and participation. Voas, Crockett and Olson (2002) show that the previously standard way of testing these two competing theories is incorrect. This paper draws on the firm entry literature from industrial organization to present a different test of these theories. Specifically, an entry model inspired by Bresnahan and Reiss (1991) is used to test whether an increase in the number of denominations in a (small, isolated) market increases or decreases religious enthusiasm.