The politics of entry

Politicians’ capability to direct market access puts them at the heart of a struggle between entrepreneurs for preferential access to a protected market. Using a single political economy framework we study how interest groups are formed to jointly offer political contributions in exchange for such preferential access. The effectiveness of these offers depends on the political influence of consumers who suffer from reduced production. In three chapters we closely examine differences in group formation under lobbying or bribing, the effects of bank ownership on the level of entry and financial stability, and the possibility that politicians favour entry of core constituents independent of their efficiency.