Learning-by-Doing with Spillovers in Competitive Industries, Free Entry, and Regulatory Policy
AbstractWe study the impact of learning-by-doing with spillovers in competitive markets with free market entry. Within a two period model, we consider first the case where fixed costs are incurred only once, and entry is once and for all. In the second case fixed costs are incurred in each period, and both market exit after the first period and late entry in the second period is possible. For the first case first best allocations can only be decentralized by subsidizing output in the first period and additionally paying an entry premium. If exit and late entry are possible and if market exit by some firms is socially optimal, the optimal policy scheme requires a nonlinear output subsidy which serves to discriminate between exiting and staying firms. We further investigate the comparative statics effects of the different policy instruments. --
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Bibliographic InfoPaper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2005,09.
Date of creation: 2005
Date of revision:
learning-by-doing; spillovers; regulatory policy;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-05 (All new papers)
- NEP-COM-2006-08-05 (Industrial Competition)
- NEP-HRM-2006-08-05 (Human Capital & Human Resource Management)
- NEP-TID-2006-08-05 (Technology & Industrial Dynamics)
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