Entry Barriers, Idiosyncratic Distortions, and the Firm-Size Distribution

Roberto Fattal Jaef

No 9027, Policy Research Working Paper Series from The World Bank

Abstract: This paper studies the interaction between barriers to firm entry and distortions to allocative efficiency in a standard model of firm dynamics. It derives a strategy to infer entry barriers based on cross-country differences in the firm size distribution, cross-country estimates of idiosyncratic distortions, and equilibrium conditions of the model. The strategy yields entry barriers that are well captured by regulation-based indicators in advanced economies but are largely underestimated in middle- and low-income countries. Regulation-based indicators cannot account for cross-country differences in average firm size and underestimate the aggregate productivity gains associated with their removal by up to 8 percent on average.

Date: 2019-09-27
New Economics Papers: this item is included in nep-bec, nep-com and nep-tid
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Journal Article: Entry Barriers, Idiosyncratic Distortions, and the Firm Size Distribution (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9027

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