Cross-country and Within-country Differences in the Business Climate
Eric Bartelsman, John C. Haltiwanger, and Stefano Scarpetta ,
( 28 )
International Journal of Industrial Organization

In this note we document how constraints in the business environment, as perceived by individual firms, differ both across countries and within each country, across firms. This finding is of key importance given recent theoretical models that suggest idiosyncratic distortions can have large aggregate effects. Not only do such distortions affect the behaviour of incumbent firms, but they also impinge on the selection of firms that enter the market or leave it.

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