Market Liberalization, Regulatory Uncertainty, and Firm Investment
AbstractMotivated by the German postal market, this paper analyzes the effects of regulatory uncertainty about labor costs for investment into a liberalized market. We distinguish between the external investment margin (market entry) and the internal investment margin (technology) and establish that regulatory uncertainty affects these margins differently, encouraging market entry but discouraging investment at the internal margin. As a consequence, the impact of regulatory uncertainty on competition in liberalized markets is the result of these two countervailing forces.
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Bibliographic InfoPaper provided by Department of Economics, University of Konstanz in its series Working Paper Series of the Department of Economics, University of Konstanz with number 2011-08.
Length: 10 pages
Date of creation: 05 May 2011
Date of revision:
Other versions of this item:
- Florian Baumann & Tim Friehe, 2012. "Market Liberalization, Regulatory Uncertainty, and Firm Investment," German Economic Review, Verein für Socialpolitik, vol. 13(3), pages 352-361, 08.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-24 (All new papers)
- NEP-BEC-2011-05-24 (Business Economics)
- NEP-MIC-2011-05-24 (Microeconomics)
- NEP-REG-2011-05-24 (Regulation)
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