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Democratization and Barriers to Entry in a Two-Dimensional Voting Model

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  • Dmitry A. Veselov

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, HSE - Vysšaja škola èkonomiki = National Research University Higher School of Economics [Moscow])

Abstract

We propose a simple quality-ladder model with heterogeneous agents differing in their skills and wealth endowment to explain the persistence of barriers to entry in new democracies. In the model agents vote for a rate of redistribution and for the level of barriers to entry, which protect the incumbent firms from competition with new entrants. We show that even if a society democratizes, under certain conditions this leads only to the rise of redistribution, rather than to the elimination of barriers to entry. We show that this argument is particularly relevant for countries with a low level of human capital and high inequality in incomes and in skills.

Suggested Citation

  • Dmitry A. Veselov, 2015. "Democratization and Barriers to Entry in a Two-Dimensional Voting Model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01158139, HAL.
    • Handle: RePEc:hal:cesptp:halshs-01158139
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01158139
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    More about this item

    Keywords

    barriers to entry; majority voting; quality-ladders model; income inequality; skills inrequality; skills inequality; persistence of economic institutions;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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