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Title:Regulatory barriers and entry in developing economies PDF Logo
Authors:Bennett, John
Estrin, Saul
Issue Date:2006
Series/Report no.:IZA Discussion Papers 2150
Abstract:We model entry by entrepreneurs into new markets in developing economies with regulatory barriers in the form of licence fees and bureaucratic delay. Because laissez faire leads to 'excessive' entry, a licence fee can increase welfare by discouraging entry. However, in the presence of a licence fee, bureaucratic delay creates a strategic opportunity, which can result in both greater entry by first movers and a higher steady-state number of firms. Delay also leads to speculation, with entrepreneurs taking out licences to obtain the option of immediate entry if they later observe the industry to be profitable enough.
Subjects:entry
entry barriers
developing economy
JEL:L50
O14
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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