TY - JOUR
T1 - The impact of regulation on private security industry dynamics
AU - Scheerlinck, Glenn
AU - Buts, Caroline
AU - Cools, Marc
AU - Reniers, Genserik
PY - 2020
Y1 - 2020
N2 - As the amount of regulation continues to increase and private security firms play a more and more vital role in a modern society’s security, policy makers and practitioners acknowledge the need for sound research. Moreover, studying regulation and private security industry dynamics can enable a better alignment of regulation to its objectives, namely to control abusive and corrupt conduct of some private security companies and to improve the professionalism of the industry. Using novel data on the width and the restrictiveness of private security regulation and data on firm birth rate, firm death rate and firm survival rate, an instrumental variable approach is employed in a panel data random effect models, covering the period from 2013 to 2017. As regulation increases, we document a decrease in firm birth rate, firm death rate as well as firm survival rate of recent newcomers. Regarding firm birth rate and death rate, we document a gradually decreasing impact of older regulation. However, while additional regulation negatively affects survival rate, we find no impact of older regulation on company survival. Incumbents clearly gain an advantage from lobbying to increase regulation and consequently raising barriers to entry.
AB - As the amount of regulation continues to increase and private security firms play a more and more vital role in a modern society’s security, policy makers and practitioners acknowledge the need for sound research. Moreover, studying regulation and private security industry dynamics can enable a better alignment of regulation to its objectives, namely to control abusive and corrupt conduct of some private security companies and to improve the professionalism of the industry. Using novel data on the width and the restrictiveness of private security regulation and data on firm birth rate, firm death rate and firm survival rate, an instrumental variable approach is employed in a panel data random effect models, covering the period from 2013 to 2017. As regulation increases, we document a decrease in firm birth rate, firm death rate as well as firm survival rate of recent newcomers. Regarding firm birth rate and death rate, we document a gradually decreasing impact of older regulation. However, while additional regulation negatively affects survival rate, we find no impact of older regulation on company survival. Incumbents clearly gain an advantage from lobbying to increase regulation and consequently raising barriers to entry.
KW - European Union
KW - Industry dynamics
KW - Private security
KW - Regulation
UR - http://www.scopus.com/inward/record.url?scp=85088541866&partnerID=8YFLogxK
U2 - 10.1007/s10657-020-09663-5
DO - 10.1007/s10657-020-09663-5
M3 - Article
AN - SCOPUS:85088541866
SN - 0929-1261
VL - 50
SP - 223
EP - 240
JO - European Journal of Law and Economics
JF - European Journal of Law and Economics
IS - 2
ER -