Consider the case of an upstream manufacturing (4 firm concentration ratio is 30% -- which means the 4 largest companies represent 30% of industry sales) and a downstream distribution industry (4 firm concentration ratio of 70%). Suppose that in period one, entry into distribution was restricted due to a regulation (no price regulation only entry regulation). However, in period two this regulation is repealed and entry into distribution is allowed and entry occurs. As a result of entry into distribution, distributors become more competitive and, ultimately, the prices distributors charge their customers (downstream customers) falls leading to an increase in quantity consumed. What will the effect of entry into distribution be on the manufacturing industry's profits? What factors limit the strength of the effect on the manufacturing industry? That is, whether you believe the effect on the manufacturing industry is positive or negative, under what conditions would that affect be larger?