Social Efficiency of Entry in an Open Economy

Han, Tien-Der; Haque, M. Emranul; Mukherjee, Arijit

Abstract

We show that cost asymmetry between the domestic and foreign firms is not necessary for the occurrence of insufficient entry in the domestic country. This result provides a rationale for pro-competitive domestic policies even in the absence of cost asymmetries among the domestic and foreign firms. However, if significant demand comes from foreign countries, and the market structures are determined endogenously in the domestic and foreign countries, domestic-entry in an open economy might not be insufficient, implying that foreign competition might not reduce the importance of anti-competitive domestic policies.

• Journal Article Type: Article
• Acceptance Date: Dec 15, 2021
• Online Publication Date: Dec 29, 2021
• Publication Date: Jan 14, 2022
• Deposit Date: Dec 17, 2021
• Publicly Available Date: Jun 30, 2022
• Journal: B.E. Journal of Economic Analysis & Policy
• Electronic ISSN: 1935-1682
• Publisher: Walter de Gruyter GmbH
• Peer Reviewed: Peer Reviewed
• Volume: 22
• Issue: 1
• Pages: 203-219
• DOI: https://doi.org/10.1515/bejeap-2020-0097
• Keywords: Economics, Econometrics and Finance (miscellaneous); Economics and Econometrics
• Public URL: https://nottingham-repository.worktribe.com/output/7022601
• Publisher URL: https://www.degruyter.com/document/doi/10.1515/bejeap-2020-0097/html