Jump to ContentJump to Main Navigation
Show Summary Details
More options …

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

IMPACT FACTOR 2018: 0.173
5-year IMPACT FACTOR: 0.248

CiteScore 2018: 0.24

SCImago Journal Rank (SJR) 2018: 0.163
Source Normalized Impact per Paper (SNIP) 2018: 0.186

Mathematical Citation Quotient (MCQ) 2018: 0.08

See all formats and pricing
More options …

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
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Tan Li / Bing Qian
Published Online: 2019-06-11 | DOI: https://doi.org/10.1515/bejte-2018-0054


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


  • Atallah, G. 2005. “R&D Cooperation with Asymmetric Spillovers.” Canadian Journal of Economics 38: 919–36.CrossrefGoogle Scholar

  • Bourreau, M., and M. Verdier. 2014. “Cooperative and Noncooperative R&D in Two-Sided Markets.” Review of Network Economics 13: 175–90.Web of ScienceGoogle Scholar

  • Cellini, R., and L. Lambertini. 2009. “Dynamic R&D with Spillovers: Competition vs Cooperation.” Journal of Economic Dynamics & Control 33: 568–82.Web of ScienceCrossrefGoogle Scholar

  • Crampes, C., C. Haritchabalet, and B. Jullien. 2009. “Advertising, Competition and Entry in Media Industries.” Journal of Industrial Economics 57 (1): 7–31.CrossrefWeb of ScienceGoogle Scholar

  • d’Aspremont, C., and A. Jacquemin. 1988. “Cooperative and Noncooperative R&D in Duopoly with Spillovers.” American Economic Review 78: 1133–37.Google Scholar

  • Dixit, A., and J. E. Stiglitz. 1977. “Monopolistic Competition and Optimum Product Diversity.” The American Economic Review 83 (1): 297–308.Google Scholar

  • Ghosh, A., and H. Morita. 2007a. “Free Entry and Social Efficiency under Vertical Oligopoly.” The RAND Journal of Economics 38 (2): 541–54.CrossrefGoogle Scholar

  • Ghosh, A., and H. Morita. 2007b. “Social Desirability of Free Entry: A Bilateral Oligopoly Analysis.” International Journal of Industrial Organization 25 (5): 925–34.CrossrefGoogle Scholar

  • Ghosh, A., J. Lim, and H. Morita. 2017. “Free Entry and Social Efficiency in an Open Economy.” Working Paper.

  • Gu, Y., A. Rasch, and T. Wenzel. 2016. “Price-Sensitive Demand and Market Entry.” Papers in Regional Science 95 (4): 865–75.Web of ScienceCrossrefGoogle Scholar

  • Gu, Y., and T. Wenzel. 2009. “A Note on the Excess Entry Theorem in Spatial Models with Elastic Demand.” International Journal of Industrial Organization 27 (5): 567–71.CrossrefWeb of ScienceGoogle Scholar

  • Gu, Y., and T. Wenzel. 2012. “Price-Dependent Demand in Spatial Models.” B. E. Journal of Economic Analysis & Policy 12 (1): Article 6.Web of Science

  • Kamien, M. I., E. Muller and I. Zang. 1992. “Research Joint Ventures and R&D Cartels.” American Economic Review 82: 1293–306.Google Scholar

  • Mankiw, N. G., and M. D. Whinston, 1986. “Free Entry and Social Inefficiency.” The RAND Journal of Economics, 17 (1): 48–58.Google Scholar

  • Matsumura, T. 2000. “Entry regulation and social welfare with an integer problem.” Journal of Economics, 71 (1): 47–58.Google Scholar

  • Matsumura, T., and M. Okamura. 2006. “A Note on the Excess Entry Theorem in Spatial Markets.” International Journal of Industrial Organization 24 (5): 1071–76.CrossrefGoogle Scholar

  • Motta, M. 1992. “Cooperative R&D and Vertical Product Differentiation.” International Journal of Industrial Organization 10: 643–61.CrossrefGoogle Scholar

  • Mukherjee, A. 2012. “Social Efficiency of Entry with Market Leaders.” Journal of Economics and Management Strategy 21 (2): 431–44.CrossrefWeb of ScienceGoogle Scholar

  • Ramani, V., and B. Saha. 2012. “Optimal Privatization and Entry in a Differentiated Mixed Oligopoly.” Working paper.

  • Salop, S. 1979. “Monopolistic Competition with Outside Goods.” Bell Journal of Economics 10 (1): 141–56.CrossrefGoogle Scholar

  • Spence, M. 1976. “Product Selection, Fixed Costs, and Monopolistic Competition.” The Review of Economic Studies 43 (2): 217–35.CrossrefGoogle Scholar

  • Suzumura, K. 1992. “Cooperative and Noncooperative R&D in an Oligopoly with Spillovers.” American Economic Review 82: 1307–20.Google Scholar

  • Suzumura, K., and K. Kiyono. 1987. “Entry Barriers and Economic Welfare.” The Review of Economic Studies 54 (1): 157–67.CrossrefGoogle Scholar

  • Vickrey, W. S. 1964. Microstatics. New York: Harcourt, Brace and World.

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.

Export Citation

© 2019 Walter de Gruyter GmbH, Berlin/Boston.Get Permission

Supplementary Article Materials

Comments (0)

Please log in or register to comment.
Log in