TY  - JOUR
AU  - Grossman,Gene M.
AU  - Horn,Henrik
TI  - Infant-Industry Protection Reconsidered:  The Case of Informational     Barriers to  Entry
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2159
PY  - 1989
Y2  - May 1989
UR  - http://www.nber.org/papers/w2159
L1  - http://www.nber.org/papers/w2159.pdf
N1  - Author contact info:
Gene M. Grossman
International Economics Section
Department of Economics
Princeton University
Princeton, NJ 08544
Tel: 609/258-4823
Fax: 609/258-1374
E-Mail: grossman@princeton.edu

Henrik Horn
Research Institute of Industrial Economics
Box 55665, SE-102 15 Stockholm, Sweden
E-Mail: henrik.horn@econ-law.se
AB  - In industries with imperfect consumer information, the lack of a reputation puts latecomers at a competitive disadvantage vis-a-vis established firms. We consider whether the existence of such informational barriers to entry provides a valid reason for temporarily protecting infant producers of experience goods and services. Our model incorporates both moral hazard in an individual firm's choice of quality and adverse selection among potential entrants into the industry. We find that infant-industry protection often exacerbates the welfare loss associated with these market imperfections.
ER  -