Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Thursday, April 16, 2009

Entry Barriers, Competition, and Technology Adoption

Posted by D. Daniel Sokol

Lei Fang (Federal Reserve Bank of Atlanta) discusses Entry Barriers, Competition, and Technology Adoption.

ABSTRACT: There are large differences in income per capita across countries. Growth accounting finds that a large part of the differences comes from the differences in total factor productivity (TFP). This paper explores whether barrier to entry is an important factor for the cross-country differences in TFP. The paper develops a new model to link entry barriers and technology adoption. In the model, higher barriers to entry effectively reduce entry threat, and lower entry threat leads to adoption of less productive technologies. The paper demonstrates that technology adopted in the economy with entry threats is at least as good as the technology adopted in the economy without entry threats. Moreover, the paper presents numerical simulations that suggest entry barriers could be a quantitatively important reason for cross-country differences in TFP and are more harmful to productivity in the countries with monopolists facing inelastic demand.

http://lawprofessors.typepad.com/antitrustprof_blog/2009/04/entry-barriers-competition-and-technology-adoption.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0115701375a8970b

Listed below are links to weblogs that reference Entry Barriers, Competition, and Technology Adoption:

Comments

Post a comment