Regulatory Entry Barriers, Rent Shifting and the Home Market Effect

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• 作者：Mart&iacute ; n Tobal
• 刊名：Review of International Economics
• 出版年：2017
• 出版时间：February 2017
• 年：2017
• 卷：25
• 期：1
• 页码：76-97
• 全文大小：200K
• ISSN：1467-9396

文摘

This paper introduces regulatory entry barriers in a model of the home market effect. The entry barriers generate local rents that have unexpected but significant implications. First, the home market effect is magnified. Second, when countries are sufficiently unequal in size and rents are sufficiently large, symmetric reductions in trade costs reduce welfare in the small country. Third, entry barriers increase the large country's market size and, surprisingly, can increase its welfare. Fourth, a unilateral increase in trade protection shifts foreign rents to the home country. This rent-shifting effect amplifies the standard production relocation motive for trade policy intervention.