Barriers to entry
In economics and mostly especially in the theory of 蜂胶作用competition, barriers to entry is obstacles in the path of a firm that make it difficult to enter a given market.
Barriers to entry are the source of a firm's pricing power - the ability of a firm to rai prices without losing all its customers.
The term refers to hindrances that an individual may face while trying to gain entrance into a profession or trade. It also, more commonly, refers to hindrances that a firm (or even a country) may face while trying to enter a market, industry or trade grouping. Barriers to entry restrict competition in a market.
Definitions
George Stigler defined an entry barrier as “A cost of producing which must be borne by a firm which eks to enter an industry but is not borne by firms already in the industry”.
ppt背景图片怎么设置“ | A barrier to entry is anything that prevents entry when entry is socially beneficial | ” |
—Diagnosing Monopoly (1979), Franklin M. Fisher |
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Joe S. Bain defined as a barrier to entry anything that allows incumbent firms to earn supranormal profits without threat of entry.
Barriers to entry for firms into a market
Barriers to entry into markets for firms include:
∙Advertising - Incumbent firms can ek to make it difficult for new competitors by spending heavily on advertising that new firms would find more difficult to afford. This is known as the market power theory of advertising.[5] Here, established firms' u of advertising creates a consumer perceived difference in its brand from other brands to a degree that consumers e its brand as a slightly different product.[5] Since the brand is en as a slightly different product, products from existing or potential competitors cannot be perfectly substituted in place of the established firm's brand.[5] This makes it hard for new competitors to gain consumer acceptance.[5] iu男友
∙Control of resources - If a single firm has control of a resource esntial for a certain ind
ustry, then other firms are unable to compete in the industry.
∙Cost advantages independent of scale - Proprietary technology, know-how, favorable access to raw materials, favorable geographic locations, learning curve cost advantages.
手机上怎么制作表格∙Customer loyalty - Large incumbent firms may have existing customers loyal to established products. The prence of established strong brands within a market can be a barrier to entry in this ca.
∙Distributor agreements - Exclusive agreements with key distributors or retailers can make it difficult for other manufacturers to enter the industry.
∙Economy of scale - Large, experienced firms can generally produce goods at lower costs than small, inexperienced firms. Cost advantages can sometimes be quickly reverd by advances in technology. For example, the development of personal computers has allowed small companies to make u of databa and communications technology which was once extremely expensive and only available to large corporations.
∙Government regulations - It may make entry more difficult or impossible. In the extreme ca, a government may make competition illegal and establish a statutory monopoly. Requirements for licens and permits may rai the investment needed to enter a market, creating an effective barrier to entry.
∙Inelastic demand - One strategy to penetrate a market is to ll at a lower price than the incumbents. This is ineffective with price-innsitive consumers.
∙Intellectual property - Potential entrant requires access to equally efficient production technology as the combatant monopolist in order to freely enter a market. Patents give a firm the legal right to stop other firms producing a product for a given period of time, and so restrict entry into a market. Patents are intended to encourage invention and technological progress by offering this financial incentive. Similarly, trademarks and rvicemarks may reprent a kind of entry barrier for a particular product or rvice if the market is dominated by one or a few well-known names.
∙Investment - That is especially in industries with economies of scale and/or natural mono
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∙Network effect - When a good or rvice has a value that depends on the number of existing customers, then competing players may have difficulties in entering a market where an established company has already captured a significant ur ba.
∙水果壁纸Predatory pricing - The practice of a dominant firm lling at a loss to make competition more difficult for new firms that cannot suffer such loss, as a large dominant firm with large lines of credit or cash rerves can. It is illegal in most places; however, it is difficult to prove. See antitrust.
∙Restrictive practices, such as air transport agreements that make it difficult for new airlines to obtain landing slots at some airports.
∙Rearch and development - Some products, such as microprocessors, require a large upfront investment in technology which will deter potential entrants.
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