Rising and Changing Professional Knowledge as Barriers to Entry

Journal of Theoretical Accounting Research, Volume 10, Issue 2, Spring 2015

Hebrew University of Jerusalem Legal Research Paper

17 Pages Posted: 27 Aug 2015

See all articles by Shmuel Nitzan

Shmuel Nitzan

Bar-Ilan University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Uriel Procaccia

Hebrew University of Jerusalem - Faculty of Law

Joseph Tzur

Ruppin Academic Center - Department of Economics and Management

Date Written: August 26, 2015

Abstract

Applying a partial equilibrium model, this paper examines the role of the rate of increase in the level of professional knowledge and the role of the rate of replacement of "old" for "new" knowledge on the equilibrium concentration level in a market for professional services. The two main results provide the conditions for ‘no-entry’ and ‘no-exit’ equilibrium. These conditions provide a plausible rationalization for concentration in the high-level market for professional services. In this paper we use data pertaining in particular to the high-level market for auditing services. The generality of our results suggests that a similar model can be utilized to illuminate concentration phenomena in additional markets for professional and related services.

Keywords: economics, no entry, no exit, equilibrium model, services

Suggested Citation

Nitzan, Shmuel and Procaccia, Uriel and Tzur, Joseph, Rising and Changing Professional Knowledge as Barriers to Entry (August 26, 2015). Journal of Theoretical Accounting Research, Volume 10, Issue 2, Spring 2015, Hebrew University of Jerusalem Legal Research Paper, Available at SSRN: https://ssrn.com/abstract=2651044

Shmuel Nitzan

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+972.3.531.8930 (Phone)
+972.3.535.3180 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Uriel Procaccia (Contact Author)

Hebrew University of Jerusalem - Faculty of Law ( email )

Mount Scopus
Mount Scopus, IL 91905
Israel

Joseph Tzur

Ruppin Academic Center - Department of Economics and Management ( email )

Emek Hefer 40250
Israel

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