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Regulatory Barriers to Entry in Industrial Sectors

  • Kotsios, Panayotis
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    The entry of new competitors operates as a balancing force against high levels of industrial concentration and the abuse of dominant position by firms with large market shares. Entry increases supply, lowers prices, intensifies innovation and brings equilibrium to the markets that don’t operate in a socially desirable manner. This paper examines the impact of regulatory restrictions to the entry of new competitors in industrial sectors. It provides a short description of the 13 most important sources of regulatory barriers and assesses their role and importance as entry barriers. The conclusion is that regulatory restrictions can be a very important, almost insurmountable barrier to the entry of new competitors, but their role is not always socially harmful. The use of certain sources of regulatory barriers is effective in protecting social welfare instead of harming it. Barriers that promote new competition or are applied in order to protect consumer welfare are socially useful, while barriers that restrict competition and limit new competitor entry, in cases other than natural monopolies, are socially harmful.

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    File URL: https://mpra.ub.uni-muenchen.de/27976/2/MPRA_paper_27976.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27976.

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    Date of creation: Mar 2010
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    Handle: RePEc:pra:mprapa:27976
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    8. Waterson, Michael, 1987. " Recent Developments in the Theory of Natural Monopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 1(1), pages 59-80.
    9. Ryo Horii & Tatsuro Iwaisako, 2005. "Economic Growth with Imperfect Protection of Intellectual Property Rights," Discussion Papers in Economics and Business 05-23, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
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    17. Spiller, Pablo T, 1990. "Politicians, Interest Groups, and Regulators: A Multiple-Principals Agency Theory of Regulation, or "Let Them Be Bribed."," Journal of Law and Economics, University of Chicago Press, vol. 33(1), pages 65-101, April.
    18. Gelfand, Matthew D. & Spiller, Pablo T., 1987. "Entry barriers and multiproduct oligopolies: Do they forebear or spoil?," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 101-113, March.
    19. Harold Demsetz, 1981. "Barriers to Entry," UCLA Economics Working Papers 192, UCLA Department of Economics.
    20. Hoekman Bernard & Kee Hiau Looi & Olarreaga Marcelo, 2004. "Tariffs, Entry Regulation and Markups: Country Size Matters," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-24, September.
    21. Preston R. Fee & Hugo M. Mialon & Michael A. Williams, 2004. "What Is a Barrier to Entry?," American Economic Review, American Economic Association, vol. 94(2), pages 461-465, May.
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    23. R. E. Caves & M. E. Porter, 1977. "From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New Competition," The Quarterly Journal of Economics, Oxford University Press, vol. 91(2), pages 241-261.
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