EconPapers    
Economics at your fingertips  
 

Size-dependent policies and risky firm creation

Sakai Ando

Journal of Public Economics, 2021, vol. 197, issue C

Abstract: This paper studies the welfare implications of size-dependent firm regulation policies (SDPs) in the presence of entrepreneurial risks. Although SDPs have been considered sources of misallocation, it is shown that, once entrepreneurial risks are taken into account, SDPs can improve efficiency. Quantitatively, based on French data, removing the SDP can lead to output and welfare loss by up to 1.3 and 1.1 percent respectively. Importantly, the sign and the policy implications are the opposite of the previous literature that abstracts from risks. The analysis uncovers a novel trade-off between the inefficiencies in the intensive and extensive margins.

Keywords: Misallocation; Firm creation; Size-dependent policy; Incomplete markets (search for similar items in EconPapers)
JEL-codes: D52 D61 H21 J08 L11 L51 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272721000402
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:197:y:2021:i:c:s0047272721000402

DOI: 10.1016/j.jpubeco.2021.104404

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-04-30
Handle: RePEc:eee:pubeco:v:197:y:2021:i:c:s0047272721000402