Inefficient Entry: A Comparative Average-Cost Analysis Carlos A. Cinquetti (São Paulo State University) Department of Economics. Rod. Araraquara-Jaú, Km 01. Araraquara, SP 14800-901. Brazil. Phone:55(16) 3334-6214. Email: cinquett@fclar.unesp.br Abstract With a composite fixed-cost variable, consisting of both a technology coefficient and firm scale, we perform a comparative cost analysis to examine the scale effect of trade protec- tion. Evidence from the manufacturing industry is based on Brazil’s import-substitution industrialization (ISI), relatively to that of the USA. The panel-data analysis clearly shows a positive correlation between the number of firms and the average costs, which is highly dictated by the mean firm size. Key Words: Scale Effect; Average Cost; Trade Protection; Inefficient Entry; Monopolistic Com- petition; Brazil