The political economy of entry barriers

Toshihiko Mukoyama, Latchezar Popov

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

We study a political economy model of entry barriers. Each period the policymaker determines whether to impose a high barrier to entry, and the special interest groups try to influence the policymaker's decision. Entry is accompanied by creative destruction-when many new firms enter, old firms are more likely to be driven out of the market. Therefore the current incumbents (industry leaders) tend to lobby for a higher entry barrier and potential entrants (industry followers) are likely to lobby for a freer environment for entry. We analyze both static and dynamic versions of the model to examine what kind of environment supports a policy that blocks entry. In the dynamic model, the economy can exhibit various different dynamics. In particular, multiple steady states may arise in equilibrium.

Original languageEnglish
Pages (from-to)383-416
Number of pages34
JournalReview of Economic Dynamics
Volume17
Issue number3
DOIs
StatePublished - Jul 2014

Keywords

  • Entry and exit
  • Lobbying
  • Political economy

Fingerprint Dive into the research topics of 'The political economy of entry barriers'. Together they form a unique fingerprint.

Cite this