The European Journal of Comparative Economics
ISSN: 1824-2979
Year: 2013, December. Volume: 10 - Issue: 3

Firm entry and aggregate efficiency growth: An optimal dynamic - Program of entry and R&D investment

Asma Raies

View this article (PDF)

Start page: 355 - End page: 376

Firms entry, R&D, aggregate efficiency, endogenous growth
The effect of entry on the aggregate efficiency growth is still theoretically and empirically unresolved. Many studies focused on this effect in short and long-run, without considering the dynamic transition and how do entry affect the convergence of the industrytoward its long-run equilibrium? This paper aims to provide an answer and to fill this gap by employingoptimal control principles. Our model exhibits saddlepath stability and shows that the effect of entry and entry liberalizing policy (reducing the entry cost) on the aggregate efficiency growth may be positive, negative or nil depending on the industry’s initial characteristics (size and R&D). This theoretical result can justify the inconclusive current empirical evidence.

Jel code: L11
Jel code: L12
Jel code: L22
Jel code: L25
Jel code: O41
In case of problems please write an e-mail to
Supplemento a LIUC Papers
Direttore Responsabile: Piero Cavaleri
Università Carlo Cattaneo - LIUC Matteotti, 22
21053 Castellanza (Va) - Italia
Registro stampa Tribunale di Busto Arsizio n. 11/93 del 11.06.93