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Market Entry Regulation and International Competition

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  • Bayindir-Upmann, Thorsten

    (University of Bielefeld)

  • Frank St”hler

    (University of Kiel)

Abstract

As a part of their 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.

Suggested Citation

  • Bayindir-Upmann, Thorsten & Frank St”hler, 2002. "Market Entry Regulation and International Competition," Royal Economic Society Annual Conference 2002 17, Royal Economic Society.
    • Handle: RePEc:ecj:ac2002:17
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    References listed on IDEAS

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    Cited by:

    1. Keisaku Higashida & Hiroaki Ino, 2019. "Strategic Production Subsidy/Tax under Mutual Endogenous Entry of Foreign Firms," Discussion Paper Series 201, School of Economics, Kwansei Gakuin University.
    2. Yano, Makoto & Honryo, Takakazu, 2010. "Trade imbalances and harmonization of competition policies," Journal of Mathematical Economics, Elsevier, vol. 46(4), pages 438-452, July.
    3. Pierre Salmon, 2003. "The assignment of powers in an open-ended European Union," Post-Print hal-00445601, HAL.
    4. Hiroaki Ino & Akira Miyaoka, 2016. "Government-induced Production Commitment in the Open Economy," Discussion Paper Series 142, School of Economics, Kwansei Gakuin University, revised May 2016.
    5. James Markusen & Frank Stähler, 2011. "Endogenous market structure and foreign market entry," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(2), pages 195-215, June.
    6. Koska, Onur A. & Stähler, Frank, 2014. "Trade and imperfect competition in general equilibrium," Journal of International Economics, Elsevier, vol. 94(1), pages 157-168.
    7. Marjit, Sugata & Mukherjee, Arijit, 2013. "Foreign competition and social efficiency of entry," Economic Modelling, Elsevier, vol. 32(C), pages 108-112.
    8. Debasmita Basak & Emmanuel Petrakis, 2021. "Social efficiency of entry: Implications of network externalities," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(4), pages 820-829, November.
    9. Harks, Tobias & Klimm, Max, 2015. "Equilibria in a class of aggregative location games," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 211-220.

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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