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Social Efficiency of Entry in an Open Economy

Author

Listed:
  • Han Tien-Der

    (School of Business and Economics, Loughborough University, Loughborough, UK)

  • Haque M. Emranul

    (Department of Economics, The University of Manchester, Manchester, UK)

  • Mukherjee Arijit

    (Jubilee Campus, Nottingham University Business School, Wollaton Road, NottinghamNG8 1BB, UK)

Abstract

We show that cost asymmetry between the domestic and foreign firms is not necessary for the occurrence of insufficient entry in the domestic country. This result provides a rationale for pro-competitive domestic policies even in the absence of cost asymmetries among the domestic and foreign firms. However, if significant demand comes from foreign countries, and the market structures are determined endogenously in the domestic and foreign countries, domestic-entry in an open economy might not be insufficient, implying that foreign competition might not reduce the importance of anti-competitive domestic policies.

Suggested Citation

  • Han Tien-Der & Haque M. Emranul & Mukherjee Arijit, 2022. "Social Efficiency of Entry in an Open Economy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 22(1), pages 203-219, January.
    • Handle: RePEc:bpj:bejeap:v:22:y:2022:i:1:p:203-219:n:8
    DOI: 10.1515/bejeap-2020-0097
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    Citations

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    Cited by:

    1. Poyago-Theotoky, Joanna & Tsai, Yingyi, 2023. "Universally strong IPR protection and global welfare: A market-penetration perspective," Economic Modelling, Elsevier, vol. 124(C).
    2. Sugata Marjit & Krishnendu Ghosh Dastidar & Gouranga Gopal Das, 2022. "Market Size and Number of Firms with New Technology," CESifo Working Paper Series 9934, CESifo.
    3. Laszlo Goerke, 2022. "Endogenous Market Structure and Partisan Competition Authorities," IAAEU Discussion Papers 202201, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

    More about this item

    Keywords

    excessive entry; foreign competition; insufficient entry; F12; L13; L40;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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