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 Centre for Economic Development and Institutions(CEDI), Brunel University in its series CEDI Discussion Paper Series with number 06-02.
Length: 38 pages
Date of creation: Mar 2006
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Other versions of this item:
- Bennett, John & Estrin, Saul, 2006. "Regulatory Barriers and Entry in Developing Economies," IZA Discussion Papers 2150, Institute for the Study of Labor (IZA).
- John Bennett & Saul Estrin, 2006. "Regulatory Barriers and Entry in Developing Economies," Economics and Finance Discussion Papers 06-08, Economics and Finance Section, School of Social Sciences, Brunel University.
- 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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