Does the Internet Affect the Relationship Between Government Regulations and New Firm Entry Rates? Evidence from a Cross-Country Study

• Main Author: Perez-Orselli, Emilia
• Format: Others
• Published: Scholarship @ Claremont 2013
• Subjects: new businesses; firm entry rate; internet usage; government regulations; Econometrics; Economic Theory; Growth and Development; International Economics; Labor Economics; Macroeconomics
• Online Access: http://scholarship.claremont.edu/scripps_theses/239; http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1235&context=scripps_theses

While the introduction of the Internet in the past 20 years has revolutionized the way people manage established firms, little is known about the effects of the Internet on the rate of new firm entry. Since government regulations have been identified to be one of the primary determinants of firm entry rates, this paper uses recent World Bank data on Internet usage to examine whether the Internet has had any effect on the relationship between government regulations and firm entry rates across 78 countries. The primary results show that Internet usage does not appear to have a significant effect on this relationship, but the results from a robustness check between high and low income countries suggest that in high-income countries, the Internet actually increases the burden of one of the main regulations; the cost to register a business.