Regulatory Barriers and Entry in Developing Economies
AbstractWe model entry by entrepreneurs into new markets in developing economies with regulatory barriers in the form of licence fees and bureaucratic delay. Because laissez faire leads to ‘excessive’ entry, a licence fee can increase welfare by discouraging entry. However, in the presence of a licence fee, bureaucratic delay creates a strategic opportunity, which can result in both greater entry by first movers and a higher steady-state number of firms. Delay also leads to speculation, with entrepreneurs taking out licences to obtain the option of immediate entry if they later observe the industry to be profitable enough.
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Bibliographic InfoPaper provided by Economics and Finance Section, School of Social Sciences, Brunel University in its series Economics and Finance Discussion Papers with number 06-08.
Length: 36 pages
Date of creation: Mar 2006
Date of revision:
Contact details of provider:
Postal: Brunel University, Uxbridge, Middlesex UB8 3PH, UK
Other versions of this item:
- John Bennett & Saul Estrin, 2006. "Regulatory Barriers and Entry in Developing Economies," CEDI Discussion Paper Series 06-02, Centre for Economic Development and Institutions(CEDI), Brunel University.
- Bennett, John & Estrin, Saul, 2006. "Regulatory Barriers and Entry in Developing Economies," IZA Discussion Papers 2150, Institute for the Study of Labor (IZA).
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
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