Social Efficiency of Entry in an Open Economy

Han Tien- Der (), Haque M. Emranul () and Arijit Mukherjee
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Han Tien- Der: School of Business and Economics, Loughborough University, Loughborough, UK
Haque M. Emranul: Department of Economics, The University of Manchester, Manchester, UK

The B.E. Journal of Economic Analysis & Policy, 2022, vol. 22, issue 1, 203-219

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.

Keywords: excessive entry; foreign competition; insufficient entry (search for similar items in EconPapers)
JEL-codes: F12 L13 L40 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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DOI: 10.1515/bejeap-2020-0097

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