Barriers to entry and market entry decisions in consumer and industrial goods markets (original) (raw)

Market Entry Decisions: Effects of absolute and relative

Experimental Psychology (formerly Zeitschrift für Experimentelle Psychologie), 2008

In a market entry game, the number of entrants usually approaches game-theoretic equilibrium quickly, but in real-world markets business start-ups typically exceed market capacity, resulting in chronically high failure rates and suboptimal industry profits. Excessive entry has been attributed to overconfidence arising when expected payoffs depend partly on skill. In an experimental test of this hypothesis, 96 participants played 24 rounds of a market entry game, with expected payoffs dependent partly on skill on half the rounds, after their ...

Dominant Firms, Barriers to Entry Capital and Entry Dynamics

2005

Recent literature in Industrial Organization has shown that the threat of entry limits the price setting power of dominant firms and stimulates the incumbents to increase innovations ---both leading to welfare improvements. On the other hand dominant firms as incumbents strive to build up entry preventing capital. In such an environment of heterogeneous firms, we study the dynamics of competition as suggested in an earlier paper by Brock (1983). When dominant firms face a threat of the competitive fringe’s entry in the industry they, therefore, will have an incentive to prevent it. Investing into barriers to entry capital through engaging in production activities with increasing returns and high adjustment cost of investment as well as through advertising, lobbying and patents the dominant firm can create thresholds above which fringe firms cannot induce price competition and stimulate innovations. The dominant firms thus face two types of investment: Entry-deterring investment an...

The pro-competitive effect of higher entry costs

International Journal of Industrial Organization, 2002

In an oligopolistic market with vertical product differentiation incumbent firms use sophisticated entry deterring and accommodating strategies. When entry costs are low, firms accommodate entry. For higher entry costs incumbent firms deter entry by producing close substitutes. The current paper shows that higher entry costs can lead to more intense competition, meaning lower price-cost margins and lower industry profits. It also shows that total surplus increases and all consumers are strictly better off.

Fixed costs, limit pricing and investments in barriers to entry

European Economic Review, 1982

The paper analyses how investments in R&D and sales promotio.1 can give rise to barriers IO entry. It is argued that the classification of barriers lo entry suggested by J.S. Bain is not very suitable root a theoretical analysis, and an alternative ciassification is suggested. This alternative classification is then used to treat the so-called 'niche production' concept. *This article is a revised version of the paper 'Entry Barriers, Fixed Costs and Limit-prlctng'.

Barriers to entry and competitive strategies

Strategic Management Journal, 1981

The relationships between the difficulty of entry and competitive strategies in five industries, chosen for their differing structural contexts, were tested. Statistical support was found for the value of pre-entry analysis of entry barriers and of firms' predicted responses to potential entry. In particular, the creation of idle productive capacity appears to be a potent deterrent to new entrants.

Economic and Antitrust Barriers to Entry

2003

We review the extensive literature on barriers to entry in law and economics; we introduce four concepts, namely economic, antitrust, primary, and ancillary barriers to entry; we employ these concepts to classify a set of well-known structural characteristics of markets and competitive tactics by incumbents; and we apply the resulting insights to evaluate the verdicts that were reached in a set of landmark antitrust court cases in the US.

Market entry: An experimental investigation

The Journal of Socio-Economics, 1995

Experimental oligopoly markets for homogeneous products were conducted to investigate cooperative behaviors when subjects were allowed to choose whether or not to enter the market. Two types of games were designed. One was a one-stage game in which subjects were given a payoff table and asked only to make an entry decision; the other was a two-stage game in which subjects had to decide whether or not to enter and then compete either in prices or in quantities. Data indicated a signilicant tendency to establish entry cycles, with players entering one at a time, in the one-stage "price-setting" markets. On the contrary, this tendency was never observed in the one-stage "quantity-setting"markets.

The influence of internal and external factors on entry modes

geographical markets is of great importance for how well the company succeeds with their overall business mission. Selecting the right entry mode is an important decision that demands a lot of resources and thorough planning. When selecting entry mode a wide range of internal and external factors must be taken into consideration before making the final decision. This thesis purpose is to provide a better understanding of the impact of internal and external factors on Swedish SMEs' choice of international market entry strategies. In order to reach the purpose we constructed two research questions regarding how the internal and external factors influence firm's choice of international market entry mode. Based on the research questions, a literature review was conducted, which resulted in a conceptual framework that presented what would guide the data collection. In order to collect data, a qualitative, case study methodology was used, using a multiple case study through interviews as our main data collection tool. The main conclusions regarding the internal factors revealed in this thesis are that company size/resources limit the companies' possibilities to choose market entry modes which demands great financial resources, it also affects the management risk attitude toward being more risk averse. Further the findings suggest that even though the companies in the study do not exclude any single market entry mode, they prefer the use of entry modes from which they have previous experience. The findings also suggest that the motive for engaging in internationalization is that the domestic market is insufficient due to the size and maturity. The main conclusions regarding the external factors revealed in this thesis are that industry feasibility/viability of MEM influences the choice of market entry mode when there is an interest of a market as the company will alter their market entry mode in order to avoid legal difficulties when trying to reach the market. This is further enhanced by the factor of market barriers as they might force the company to choose a specific market entry mode in order to avoid legal difficulties when entering a new international market. Target country production factors can be overcome through effective implementation of well thought strategic plans, without affecting the companies' choice of market entry mode. Finally our findings suggest that the geographical distance influence on the choice of market entry mode decreases when the company's resources and knowledge increase.

Does Exogenous Barriers to Entry Make Firms Less Competitive? A Field Study in Inebolu

Econder International Academic Journal, 2018

obtained the ideas and perceptions of firms about the relationship between barriers to entry and firm's behavior. As a result of this research it is reached that in markets with high exogenous barriers to entry, incumbent firms behave less competitive consistent with the results of previous studies. This behavior also effects market and firm performance negatively.