ScholarWorks@숙명여자대학교

초록

In this paper, I examine the market failure types due to the difference between private equilibrium and social optimum in the entry decision of an entrant in the local market. In particular, I focus how conditions and types of market failures are affected by incumbent types (local firm vs. MNE), government policy types. (subsidy vs. tax) Now main results of this paper are as follows. First, when the incumbent is a local firm, then ‘excessive entry’ may occur and when the incumbent is MNE, ‘too little entry’ may occur. Second, for the case of subsidy policy by the investor’ country to the incumbent (MNE), the market failure range by ‘little entry’ becomes enlarged. Third, for the case of a tax policy by the host-country to the incumbent (MNE), ‘excessive entry’ as well as ‘little entry’ may occur. As above, the market failure types in the entry decision of an entrant are influenced by the incumbent types and government policy types. Therefore we need to decide the policy directions for the entry of a potential firm, by taking into account the above factors synthetically.

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