Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/214730 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
IAAEU Discussion Paper Series in Economics No. 03/2020
Publisher: 
University of Trier, Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier
Abstract: 
Entry in a homogeneous Cournot-oligopoly is excessive if and only if there is business-stealing (Amir et al. 2014). The excessive entry prediction has been derived primarily for closed economies and using a welfarist benchmark. We extend this framework and allow for (1) horizontal FDI in a multi-period setting and (2) interest group-based government behaviour. Opening the market to greenfield investments from abroad tends to aggravate the entry distortion. Moreover, market opening may reduce welfare if a more pronounced entry distortion dominates the gain in consumer surplus. Finally, a government, which places sufficiently little weight on the interests of consumers, will object to market opening, even if welfare rises.
Subjects: 
Excessive Entry
Cournot-Oligopoly
Horizontal FDI
Political Support Function
JEL: 
D43
D72
F21
L13
Document Type: 
Working Paper

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