Two Rationales for Insufficient Entry

Chen Linfeng (), Li Tan () and Qian Bing ()
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Chen Linfeng: School of Economics and Management, Changzhou Institute of Technology, CZ Reform and Development of Entrepreneurship and Innovation & Research Center, Changzhou, Jiangsu, 213032, China
Li Tan: School of Economics and Management, Changzhou Institute of Technology, Changzhou, Jiangsu, 213032, China
Qian Bing: School of Economics and Management, Changzhou Institute of Technology, Changzhou, Jiangsu, 213032, China

The B.E. Journal of Theoretical Economics, 2020, vol. 20, issue 1, 8

Abstract: This study offers two new rationales for insufficient entry in a given industry. The first is the presence of complementary industries. Suppose there is free entry in an industry and the complementary industries are monopolistic. If the number of complementary industries is sufficiently high, then there is insufficient entry. However, if these industries are substitutes, then there is always excessive entry. The second rationale is that there is cost-reducing R&D investment and spillover. When the spillover rate is sufficiently high, there is insufficient entry. Further, we consider the general model and obtain similar results.

Keywords: free entry; excessive entry; insufficiententry; complementary industry; R&D (search for similar items in EconPapers)
JEL-codes: D21 D43 L13 L22 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1515/bejte-2018-0054

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