Regulatory Barriers & 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 William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 824.
Date of creation: 01 Mar 2006
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Entry; Entry Barriers; Developing Economy.;
Find related papers by JEL classification:
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-15 (All new papers)
- NEP-COM-2006-07-15 (Industrial Competition)
- NEP-DEV-2006-07-15 (Development)
- NEP-ENT-2006-07-15 (Entrepreneurship)
- NEP-IND-2006-07-15 (Industrial Organization)
- NEP-REG-2006-07-15 (Regulation)
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