Antitrust & Competition Policy Blog

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

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Monday, September 20, 2010

The Impact of Firm Entry Regulation on Long-living Entrants

Posted by D. Daniel Sokol

Susanne Prantl (Max Planck Institute for Research on Collective Goods, Bonn) analyzes The Impact of Firm Entry Regulation on Long-living Entrants.

ABSTRACT: What is the impact of firm entry regulation on sustained entry into self-employment? How does firm entry regulation influence the performance of long-living entrants? In this paper, I address these questions by exploiting a natural experiment in firm entry regulation. After German reunification, East and West Germany faced different economic conditions, but fell under the same law that imposes a substantial mandatory standard on entrepreneurs who want to start a legally independent firm in one of the regulated occupations. The empirical results suggest that the entry regulation suppresses long-living entrants, not only entrants in general or transient, short-lived entrants. This effect on the number of long-living entrants is not accompanied by a counteracting effect on the performance of long-living entrants, as measured by firm size several years after entry.

http://lawprofessors.typepad.com/antitrustprof_blog/2010/09/the-impact-of-firm-entry-regulation-on-long-living-entrants.html

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