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Title:Barriers to Entry and Profitability PDF Logo
Authors:Heger, Diana
Kraft, Kornelius
Issue Date:2008
Series/Report no.:ZEW Discussion Papers 08-071
Abstract:Barriers to entry are regarded as major impediments to the working of markets. Entry must not necessarily actually take place - the perceived threat of entry may encourage incumbent firms to behave as if they are in a competitive market, even if they are not. We present empirical evidence on effects of perceived threat of entry on profitability. Using information from managers about how they assess the existence of entry barriers a strong impact of these assessments on profitability is confirmed. The number and the relative size of competitors also exert considerable effects. We find no statistically significant relation between the perceived threat of entry and the actual number of firms if the size of the relevant market is taken into account.
Subjects:Barriers to Entry
Profitability
Discrete Regression Models
JEL:C25
L25
L13
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des ZEW
ZEW Discussion Papers

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