Abstract
Evolution of any industry occurs through the entry of new firms and the growth of existing firms through increased market share. This market entry of new firms has its inherent costs. Some of these costs may arise due to various strategies of deterrence adopted by the existing firms. Other costs may be due to the market uncertainty, which may arise in the post-entry environment. The effects of entry include both the threat of potential entry into an oligopolistic industry regarding pricing, investment and R&D with advertising and also the actual entry affecting the strategies of oligopolistic suppliers in the post-entry game situation.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Bain, J. (1956) Barriers to New Competition ( Cambridge: Harvard University Press).
Cabral, O.M. (2000) Introduction to Industrial Organization ( Cambridge: MIT Press).
Cabral, O. and M. Riordan (1994) The Learning curve, market dominance and predatory pricing, Econometrica 62, 1115–1140.
Dixit, A. (1979) A model of duopoly suggesting a theory of entry barriers, Bell Journal of Economics 10, 20–32.
Dixit, A. (1981) The role of investment in entry deterrence, Economic Journal 90, 95–106.
Dorfman, R. and P. Steiner (1954) Optimal advertising and optimal quality, American Economic Review 44, 826–836.
Geroski, P.A. (2003) The Evolution of New Markets ( Oxford: Oxford University Press).
Geroski, P., R. Gilbert and A. Jacquemin (1990) Barriers to Entry and Strategic Competition ( London: Harwood Academic Publishers).
Gilbert, R. (1986) Preemptive competition, in J. Stiglitz and G. Mathewson (eds) New Developments in the Analysis of Market Structure ( Cambridge: MIT Press ).
Jovanovic, B. and S. Lach (1989) Entry exit and diffusion with learning by doing, American Economic Review 79, 690–699.
Kessides, I. (1986) Advertising, sunk costs and barriers to entry, Review of Economics and Statistics 68, 84–95.
Leibenstein, H. (1966) Allocative efficiency versus X-efficiency, American Economic Review 66, 392–415.
Masson, R. and J. Shaanan (1983) Social costs of oligopoly and the value of competition, Economic Journal 92, 80–89.
Modigliani, F. (1958) New developments in oligopoly front, Journal of Political Economy 66, 215–232.
Prahalad, C.K. and G. Hamel (1990) The core competence of the corporation, Harvard Business Review 66, 79–91.
Ruffin, R. (1971) Cournot oligopoly and competitive behavior, Review of Economic Studies 38, 493–502.
Seade, J. (1980) On the effects of entry, Econometrica 48, 479–490.
Selten, R. (1986) Elementary theory of slack-ridden imperfect competition, in J. Stiglitz and G. Mathewson (eds) New Developments in the Analysis of Market Structure ( Cambridge: MIT Press ).
Spence, M. (1984) Cost reduction, competition and industry performance, Econometrica 52, 101–122.
Sutton, J. (1991) Sunk Costs and Market Structure ( Cambridge: MIT Press).
Sylos-Labini, P. (1962) Oligopoly and Technical Progress ( Cambridge: MIT Press).
Author information
Authors and Affiliations
Copyright information
© 2007 Jati K. Sengupta
About this chapter
Cite this chapter
Sengupta, J. (2007). The Costs and Effects of Market Entry. In: Dynamics of Entry and Market Evolution. Palgrave Macmillan, London. https://doi.org/10.1057/9780230211018_3
Download citation
DOI: https://doi.org/10.1057/9780230211018_3
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-35640-9
Online ISBN: 978-0-230-21101-8
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)