Subsidizing firm entry in open economies

Vi. Conclusion v. Subsidizing Black Firm Entry Ii. the Model

8 structural entry barriers in particular markets may not encourage Black rm entry. 12 Finally , the model suggests a normative perspective on whether or not Black rm entry should be subsidized. Demsetz (1982) has argued that entry barriers may consitute an endogenous response to consumer preferences. If for example, the basis for consumers having a taste for discrimination is their inability t...

Slow Convergence in Economies with Firm Heterogeneity ∗

This paper presents a simple formula that relates the tail index of the firm size distribution to the aggregate speed with which an economy converges to its balanced growth path. The fact that there are so many firms in the right tail implies that aggregate shocks that permanently destroy employment among incumbent firms, rather than cause these firms to scale back temporarily, are followed by ...

Antitrust in Open Economies

We examine antitrust rules in a two county general equilibrium trade model, contrasting national and multilateral (cooperative) determination of competition policy, exploring the properties of policy equilibrium. It is not imperfect competition, but variation in competitive stance between sectors that matters for trading partners. Beggar-thy-neighbor competition policies relate to countries’ co...

Capitalist Diversity in Open Economies

Competition Policy in Open Economies

What is the e®ect of national antitrust policies in a world with international trade? Traditionally, economic analysis of mergers has assumed a closed economy, which as we show in this paper, may lead to errant policy in an open economy. We use a very simple model to highlight some key issues in optimal competition policy when trade is important, and compare the nationally optimal number of ̄rm...