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Barriers to Entry and Development

Author

Listed:
  • Arilton Teixeira

    (FUCAPE Business School)

  • Berthold Herrendorf

Abstract

We ask whether barriers to entry are a quantitatively important reason for the income gap between developing countries and the U.S. We develop a tractable general equilibrium model that captures the effects of barriers to entry and the other main classes of distortion typically considered in the development literature. We carry our model to the data and ask it to match the main development facts from the Penn World Table. We find that this requires large barriers to entry in developing countries, which account for about half of the income gap between developing countries and the U.S.

Suggested Citation

  • Arilton Teixeira & Berthold Herrendorf, 2009. "Barriers to Entry and Development," Fucape Working Papers 22, Fucape Business School.
    • Handle: RePEc:bbz:fcpwps:22
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    File URL: http://www.fucape.br/_public/workingpapers/22-2009.pdf
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    References listed on IDEAS

    as
    1. McGrattan, Ellen R. & Schmitz, James Jr., 1999. "Explaining cross-country income differences," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 10, pages 669-737, Elsevier.
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    6. Traca, Daniel A., 2001. "Quantitative restrictions, market power and productivity growth," Journal of Development Economics, Elsevier, vol. 65(1), pages 95-111, June.
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