Entry Regulation and Persistence of Profits in Incumbent Firms

Sameeksha Desai (), Johan E. Eklund () and Emma Lappi ()
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Sameeksha Desai: Indiana University
Johan E. Eklund: Swedish Entrepreneurship Forum
Emma Lappi: Swedish Entrepreneurship Forum

Review of Industrial Organization, 2020, vol. 57, issue 3, No 3, 537-558

Abstract: Abstract In line with the theory of creative destruction, industries where incumbent firms generate high profits will attract entry, which should drive down profits. This disciplinary effect of entry implies that profits above the norm should not exist in the long run. Factors that affect entry—such as entry regulations—could affect this profits convergence process. Using an unbalanced panel of firm- and country-level data for approximately 13,000 firms in 33 countries between 2005 and 2013, we examine the profit dynamics of incumbent firms in the context of entry and entry regulations.

Keywords: Entry; Entrepreneurship; Entry regulation; Profit; Incumbent firm; Creative destruction (search for similar items in EconPapers)
JEL-codes: L00 L22 L25 L4 O32 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11151-020-09787-7

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