Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76335
Authors: 
Upmann, Thorsten
Stähler, Frank
Year of Publication: 
2003
Series/Report no.: 
CESifo Working Paper 979
Abstract: 
As a part of their industry or 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 in equilibrium.
Subjects: 
intergovernmental competition
competition policy
entry regulation
free market entry
international trade
JEL: 
D43
F12
L11
L51
Document Type: 
Working Paper

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