Market Entry Regulation and International Competition

Upmann, Thorsten; Stähler, Frank

doi:10.2139/ssrn.427642

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Market Entry Regulation and International Competition

33 Pages Posted: 7 Aug 2003

See all articles by Thorsten Upmann

Thorsten Upmann

Helmholtz Institute for Functional Marine Biodiversity at the University of Oldenburg; Bielefeld University - Department of Business Administration and Economics; CESifo (Center for Economic Studies and Ifo Institute)

Frank Stähler

University of Tuebingen - Department of Economics; University of Adelaide - School of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: July 2003

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.

JEL Classification: D43, F12, L11, L51

Suggested Citation: Suggested Citation

Upmann, Thorsten and Stähler, Frank, Market Entry Regulation and International Competition (July 2003). Available at SSRN: https://ssrn.com/abstract=427642 or http://dx.doi.org/10.2139/ssrn.427642