March 3, 2009

Relation entry, exit and productivity: an overview of recent theoretical and empirical literature

Startersbeleid kan goed zijn voor economie

Press release

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Spokesmen

Henry van der Wiel Read more
Dick Morks Read more

However, the theories discussed do provide options for effective policy instruments. We argue that productivity or welfare should be the aim of policy and not the number of entrants, the intensity of competition or the amount of innovation expenditures.

Taking a welfare approach, we address market failures with respect to entry. The most eminent market failure is market power of dominant incumbents. Lowering institutional entry barriers economy-wide is a promising policy option for further consideration.

Whether such a policy measure actually improves social welfare depends also on the extent of other failures. Therefore, an ex ante cost-benefit analysis needs to precede intervention.

Contacts

Viktoria Kocsis Read more
Victoria Shestalova Read more
Henry van der Wiel Read more
Nick Zubanov Read more
Ruslan Lukach Read more
Bert Minne Read more