Investor Protection and Entry

  title={Investor Protection and Entry},
  author={Enrico Perotti and Paolo F. Volpin},
Entry requires external finance, especially for less wealthy entrepreneurs, so poor investor protection limits competition. We model how incumbents lobby harder to block access to finance to entrants when politicians are less accountable to voters. In a broad cross-section of countries and industries, we find that (i) entry rates and the total number of producers are positively correlated with investor protection in financially dependent sectors and (ii) countries with more accountable… CONTINUE READING

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