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Market Entry Regulation and International Competition

16 Pages Posted: 20 Aug 2008  

Frank Stähler

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

Thorsten Upmann

Bielefeld University - Department of Business Administration and Economics; CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

We analyze a non-cooperative two-country game where each government decides whether to allow free market entry of firms or to regulate market access. We show that a Pareto-efficient allocation may result in equilibrium. In particular, if the cost difference between home and foreign production is significant, production will be located in the cost-efficient country exclusively; and if this cost difference is even substantial, the induced allocation is also Pareto efficient. Only if the cost difference is insignificant, production may take place in both countries and the allocation is inefficient.

Suggested Citation

Stähler, Frank and Upmann, Thorsten, Market Entry Regulation and International Competition. Review of International Economics, Vol. 16, Issue 4, pp. 611-626, September 2008. Available at SSRN: https://ssrn.com/abstract=1239369 or http://dx.doi.org/10.1111/j.1467-9396.2008.00767.x

Frank Stähler (Contact Author)

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

HOME PAGE: http://www.frank-staehler.de

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia

Thorsten Upmann

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
D-33501 Bielefeld, NRW 33501
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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