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Market Entry Regulation and International Competition

Author

Listed:
  • Bayindir-Upmann, Thorsten

    (University of Bielefeld)

  • Frank St”hler

    (University of Kiel)

Abstract

As a part of their competition policies governments decide whether to allow for free market entry of firms or to regulate market access. We analyze a model where governments (ab)use these policy decisions for strategic reasons in an international setting. Multiple equilibria of this game emerge; and if the cost difference between domestic and foreign firms is 'significant', all equilibria induce the same allocation, where production exclusively takes place in the cost-efficient country. Moreover, these equilibria are Pareto efficient if this cost difference is 'substantial'. Only if cost differences are 'insignificant', may production take place in both countries.

Suggested Citation

  • Bayindir-Upmann, Thorsten & Frank St”hler, 2002. "Market Entry Regulation and International Competition," Royal Economic Society Annual Conference 2002 17, Royal Economic Society.
    • Handle: RePEc:ecj:ac2002:17
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    2. Keisaku Higashida & Hiroaki Ino, 2019. "Strategic Production Subsidy/Tax under Mutual Endogenous Entry of Foreign Firms," Discussion Paper Series 201, School of Economics, Kwansei Gakuin University.
    3. Yano, Makoto & Honryo, Takakazu, 2010. "Trade imbalances and harmonization of competition policies," Journal of Mathematical Economics, Elsevier, vol. 46(4), pages 438-452, July.
    4. Hiroaki Ino & Akira Miyaoka, 2016. "Government-induced Production Commitment in the Open Economy," Discussion Paper Series 142, School of Economics, Kwansei Gakuin University, revised May 2016.
    5. Pierre Salmon, 2003. "The Assignment of Powers in an Open-ended European Union," CESifo Working Paper Series 993, CESifo.
    6. Koska, Onur A. & Stähler, Frank, 2014. "Trade and imperfect competition in general equilibrium," Journal of International Economics, Elsevier, vol. 94(1), pages 157-168.
    7. Marjit, Sugata & Mukherjee, Arijit, 2013. "Foreign competition and social efficiency of entry," Economic Modelling, Elsevier, vol. 32(C), pages 108-112.
    8. Hikaru Ogawa & Wenming Wang, 2025. "Global emissions, regulatory competition and excess entry," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(2), pages 771-802, May.
    9. Debasmita Basak & Emmanuel Petrakis, 2021. "Social efficiency of entry: Implications of network externalities," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(4), pages 820-829, November.
    10. Harks, Tobias & Klimm, Max, 2015. "Equilibria in a class of aggregative location games," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 211-220.
    11. James Markusen & Frank Stähler, 2011. "Endogenous market structure and foreign market entry," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(2), pages 195-215, June.

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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