Foreign competition and social efficiency of entry

Sugata Marjit and Arijit Mukherjee

Economic Modelling, 2013, vol. 32, issue C, 108-112

Abstract: We consider social efficiency of firm-entry in the presence of foreign competition. If the labour markets are competitive, entry is insufficient for the domestic country if the transportation cost is low and the marginal costs of the domestic firms are sufficiently higher than the marginal cost of the foreign firm. In the presence of a domestic labour union, entry is always socially insufficient for the domestic country. Hence, the anti-competitive entry-regulation policy may not be justified in an industry facing foreign competition, and it may depend on the transportation cost, the marginal cost difference between the firms and the domestic labour market structure.

Keywords: Free entry; Transportation cost; Labour union; Welfare (search for similar items in EconPapers)
JEL-codes: F12 L13 L40 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:32:y:2013:i:c:p:108-112

DOI: 10.1016/j.econmod.2013.01.032

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