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Foreign competition and social efficiency of entry

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  • Marjit, Sugata
  • Mukherjee, Arijit

Abstract

We consider social efficiency of firm-entry in the presence of foreign competition. If the labour markets are competitive, entry is insufficient for the domestic country if the transportation cost is low and the marginal costs of the domestic firms are sufficiently higher than the marginal cost of the foreign firm. In the presence of a domestic labour union, entry is always socially insufficient for the domestic country. Hence, the anti-competitive entry-regulation policy may not be justified in an industry facing foreign competition, and it may depend on the transportation cost, the marginal cost difference between the firms and the domestic labour market structure.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 32 (2013)
Issue (Month): C ()
Pages: 108-112

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Handle: RePEc:eee:ecmode:v:32:y:2013:i:c:p:108-112

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Free entry; Transportation cost; Labour union; Welfare;

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References

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Cited by:
  1. Wang, Leonard F.S. & Lee, Jen-yao & Hsu, Chu-chuan, 2014. "Privatization, foreign competition, and social efficiency of free entry," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 138-147.

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