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The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan


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1935-1704
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Two Rationales for Insufficient Entry

Linfeng Chen
  • Corresponding author
  • School of Economics and Management, Changzhou Institute of Technology, CZ Reform and Development of Entrepreneurship and Innovation & Research Center, Changzhou, Jiangsu, 213032, China
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/ Tan Li / Bing Qian
Published Online: 2019-06-11 | DOI: https://doi.org/10.1515/bejte-2018-0054

Abstract

This study offers two new rationales for insufficient entry in a given industry. The first is the presence of complementary industries. Suppose there is free entry in an industry and the complementary industries are monopolistic. If the number of complementary industries is sufficiently high, then there is insufficient entry. However, if these industries are substitutes, then there is always excessive entry. The second rationale is that there is cost-reducing R&D investment and spillover. When the spillover rate is sufficiently high, there is insufficient entry. Further, we consider the general model and obtain similar results.

This article offers supplementary material which is provided at the end of the article.

Keywords: free entry; excessive entry; insufficiententry; complementary industry; R&D

JEL Classification: D21; D43; L13; L22

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About the article

Published Online: 2019-06-11


Citation Information: The B.E. Journal of Theoretical Economics, Volume 20, Issue 1, 20180054, ISSN (Online) 1935-1704, DOI: https://doi.org/10.1515/bejte-2018-0054.

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