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Barriers to Entry and Development

Author

Listed:
  • Arilton Teixeira

    (FUCAPE Business School)

  • Berthold Herrendorf

Abstract

We ask whether barriers to entry are a quantitatively important reason for the income gap between developing countries and the U.S. We develop a tractable general equilibrium model that captures the effects of barriers to entry and the other main classes of distortion typically considered in the development literature. We carry our model to the data and ask it to match the main development facts from the Penn World Table. We find that this requires large barriers to entry in developing countries, which account for about half of the income gap between developing countries and the U.S.

Suggested Citation

  • Arilton Teixeira & Berthold Herrendorf, 2009. "Barriers to Entry and Development," Fucape Working Papers 22, Fucape Business School.
    • Handle: RePEc:bbz:fcpwps:22
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    References listed on IDEAS

    as
    1. Jose E. Galdon Sanchez & James A. Schmitz, 2003. "Competitive pressure and labor productivity: world iron ore markets in the 1980s," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 27(Spr), pages 9-23.
    2. SchmitzJr, James A., 2001. "Government production of investment goods and aggregate labor productivity," Journal of Monetary Economics, Elsevier, vol. 47(1), pages 163-187, February.
    Full references (including those not matched with items on IDEAS)

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