Politically Imposed Entry Barriers

Paul H. Rubin () and Mark A. Cohen ()

Eastern Economic Journal, 1992, vol. 18, issue 3, pages 333-344

Abstract: The antitrust agencies analyze consequences of proposed mergers assuming that imports are constrained by existing quotas, a second-best approach. This policy is flawed. Quotas are endogenous. If a merger allows firms to reduce output, the quota will be increased. If an industry has sufficient political power to obtain subsidies from government then the authorities should assume that these subsidies will be reduced if market power increases. Paradoxically, for political entry barriers truly in the public interest, the antitrust authorities should take the barrier as given. We provide evidence of a large adjustment of tariffs to changes in market power.

Keywords: Firm; Government; Import; Merger; Policy; Political; Quotas; Subsidies (search for similar items in EconPapers)
JEL-codes: L40 G34 D72 F13 (search for similar items in EconPapers)
Date: 1992
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