Entry barriers, competition, and technology adoption
AbstractThere are large differences in income per capita across countries. Growth accounting finds that a large part of the differences comes from the differences in total factor productivity (TFP). This paper explores whether barrier to entry is an important factor for the cross-country differences in TFP. The paper develops a new model to link entry barriers and technology adoption. In the model, higher barriers to entry effectively reduce entry threat, and lower entry threat leads to adoption of less productive technologies. The paper demonstrates that technology adopted in the economy with entry threats is at least as good as the technology adopted in the economy without entry threats. Moreover, the paper presents numerical simulations that suggest entry barriers could be a quantitatively important reason for cross-country differences in TFP and are more harmful to productivity in the countries with monopolists facing inelastic demand.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2009-08.
Date of creation: 2009
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-05 (All new papers)
- NEP-COM-2009-04-05 (Industrial Competition)
- NEP-CSE-2009-04-05 (Economics of Strategic Management)
- NEP-EFF-2009-04-05 (Efficiency & Productivity)
- NEP-TID-2009-04-05 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
- Thomas J Holmes & David K Levine & James A Schmitz Jr, 2008.
"Monopoly and the Incentive to Innovate When Adoption Involves Switchover Disruptions,"
Levine's Working Paper Archive
122247000000001920, David K. Levine.
- Thomas J. Holmes & David K. Levine & James A. Schmitz, Jr., 2008. "Monopoly and the Incentive to Innovate When Adoption Involves Switchover Disruptions," NBER Working Papers 13864, National Bureau of Economic Research, Inc.
- Thomas J. Holmes & David K. Levine & James A. Schmitz, Jr., 2008. "Monopoly and the incentive to innovate when adoption involves switchover disruptions," Staff Report 402, Federal Reserve Bank of Minneapolis.
- Berthold Herrendorf & Arilton Teixeira, .
"Barriers to Entry and Development,"
2167726, Department of Economics, W. P. Carey School of Business, Arizona State University.
- Klaus Desmet & Stephen L. Parente, 2008.
"Bigger is better: Market size, demand elasticity and innovation,"
2008-10, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
- Klaus Desmet & Stephen L. Parente, 2010. "Bigger Is Better: Market Size, Demand Elasticity, And Innovation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(2), pages 319-333, 05.
- Holmes, Thomas J. & Jr., James A. Schmitz, 2001. "A gain from trade: From unproductive to productive entrepreneurship," Journal of Monetary Economics, Elsevier, vol. 47(2), pages 417-446, April.
- Giuseppe Nicoletti & Stefano Scarpetta, 2003.
"Regulation, productivity and growth: OECD evidence,"
CEPR;CES;MSH, vol. 18(36), pages 9-72, 04.
- Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, Productivity and Growth: OECD Evidence," OECD Economics Department Working Papers 347, OECD Publishing.
- Nicoletti, Giuseppe & Scarpetta, Stefano, 2003. "Regulation, productivity, and growth : OECD evidence," Policy Research Working Paper Series 2944, The World Bank.
- Giuseppe Nicoletti & Stefano Scarpetta, 2005. "Regulation and Economic Performance: Product Market Reforms and Productivity in the OECD," OECD Economics Department Working Papers 460, OECD Publishing.
- G. Bellettini & G. Ottaviano, 1999.
"Special Interests and Technological change,"
340, Dipartimento Scienze Economiche, Universita' di Bologna.
- Ananth Seshadri & Rodolfo Manuelli, 2005. "Human Capital and the Wealth of Nations," 2005 Meeting Papers 56, Society for Economic Dynamics.
- Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August.
- Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April.
- Berthold Herrendorf & Arilton Teixeira, 2005.
"How Barriers to International Trade Affect TFP,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 8(4), pages 866-876, October.
- Arilton Teixeira & Berthold Herrendorf, 2009. "How Barriers to International Trade Affect TFP," Fucape Working Papers 21, Fucape Business School.
- Berthold Herrendorf & Arilton Teixeira, . "How Barriers to International Trade Affect TFP," Working Papers 2167724, Department of Economics, W. P. Carey School of Business, Arizona State University.
- Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
- Diagne, Youssoupha S, 2013. "Impact of business environment on investment and output of manufacturing firms in Senegal," MPRA Paper 54227, University Library of Munich, Germany.
- Bah, El-hadj M. & Fang, Lei, 2011.
"Impact of the business environment on output and productivity in Africa,"
32225, University Library of Munich, Germany.
- El-hadj Bah & Lei Fang, 2011. "Impact of the business environment on output and productivity in Africa," Working Paper 2011-14, Federal Reserve Bank of Atlanta.
- Bah, El-hadj M. & Fang, Lei, 2011. "Impact of the business environment on output and productivity in Africa," MPRA Paper 32517, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Meredith Rector).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.