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Regulatory barriers and entry into a new competitive industry

Bennett, John and Estrin, Saul (2013) Regulatory barriers and entry into a new competitive industry. Review of Development Economics, 17 (4). pp. 685-698. ISSN 1363-6669

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Abstract

We model the effects of license fees and bureaucratic delay on firm entry into a new competitive industry, whose profitability is initially unknown. A license fee alone reduces the number of first movers and the steady-state number of firms. The combination of license fee and delay may cause some entrepreneurs to purchase licenses speculatively, only using them to enter production later if profitability is revealed to be sufficiently favourable. Alternatively, some entrepreneurs may wait, possibly buying a license only after profitability is revealed; but it is never found that some entrepreneurs adopt one of these strategies and some the other.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/%28...
Additional Information: © 2013 John Wiley & Sons Ltd.
Library of Congress subject classification: H Social Sciences > H Social Sciences (General)
Sets: Departments > Management
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 12 Dec 2013 11:41
URL: http://eprints.lse.ac.uk/54213/

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