Barriers To Entry

Dennis W. Carlton ()

No 11645, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the concept of barriers to entry. It explains that the concept is a static one and explores the inadequacy of the concept in a world with sunk costs, adjustment costs and uncertainty. The static concept addresses the question of whether profits are excessive. The more interesting and relevant question is how fast entry or exit will erode profits or losses and how do the bounds that entry and exit place on price vary with uncertainty and sunk cost. Intuition based on the static concept of barrier to entry can be misleading in many industries.

JEL-codes: L1 L4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ent, nep-ind and nep-tid
Date: 2005-10
Note: IO
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