Introduction

Abstract

This book is a theoretical treatment of a concept which has gained prominence in the industrial organization literature. Based on earlier theoretical developments it was mainly the work of Bain (1956) which gave the concept of barriers to entry the importance which it now holds. Before Bain’s book there was a strong tendency to analyze market structure in terms of the number and size of the actual market participants. That this was too static a viewpoint became increasingly clear. In its attempt to gain a more appropriate dynamic or long run perspective, industrial organization economics was driven to an investigation of entry conditions of an industry. The barriers to entry which Bain described, were a particularly successful conceptualization of such entry conditions. They were successful because they allowed Bain to explain a large portion of across industry variance of persistent rates of return on capital.