Topics in effects of entry barriers on technology adoption

There are large differences in income per capita across countries. Growth accounting finds that a large part of the differences comes from the differences in total factor productivity (TFP). This dissertation explores whether barriers to entry can account for these differences in TFP, which is motivated by empirical studies that find the prevalence of entry barriers in developing countries and the detrimental effects of these barriers on productivity.;This dissertation consists of two essays. The first essay develops a new model to link entry barriers and technology adoption. The model is tractable and has the potential to be connected with the data. The key economic mechanism through which entry barriers affect technology adoption is that higher entry barriers effectively reduce competition and less competition leads to adoption of less productive technologies. In particular, this essay shows that the technology adopted in the economy with entry threats is at least as good as the technology adopted in the economy without entry threats. This essay also shows that the effect of entry barriers on technology adoption is characterized by threshold effects. The numerical simulations suggest that entry barriers could be a quantitatively important reason for the cross-country differences in TFP. The size of this quantitative effects depends on the demand elasticity.;The second essay generates the static model in the first essay to the dynamic setting, and calibrate the balanced growth path of the dynamic model to the U.S. economy, and then, use this calibrated economy to assess the quantitative effects of entry barriers on technology adoption. The experiments show that the quantitative effect of entry barriers on technology adoption is large. In particular, if the entry barriers are 90% of the GDP per capita in a country, the technology adopted in this country will be less than half of the technology adopted in the United States. The sensitivity tests show that the quantitative effects of entry barriers on technology adoption depends on the lowest technology used in the economy, and the relative size of the adoption costs between the incumbent and the potential entrant.