IDEAS home Printed from
   My bibliography  Save this article

On the Use of Competition Policy to Enhance the Effectiveness of Industrial Policy


  • Martin Richardson
  • Stephen Knowles


Motivated by the observation that many countries with an active industrial policy also have a lax competition policy, this paper argues that restricting firm numbers may be a means of rendering industrial policy more effective. A simple model is set up in which a subsidy is desirable to correct a general externality but may induce over‐entry. Restricting the number of firms then renders the subsidy policy more effective in correcting the externality problem.

Suggested Citation

  • Martin Richardson & Stephen Knowles, 1999. "On the Use of Competition Policy to Enhance the Effectiveness of Industrial Policy," Review of Development Economics, Wiley Blackwell, vol. 3(1), pages 58-65, February.
  • Handle: RePEc:bla:rdevec:v:3:y:1999:i:1:p:58-65
    DOI: 10.1111/1467-9361.00051

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:rdevec:v:3:y:1999:i:1:p:58-65. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.