entry deterrence

entry deterrence

strategies pursued by firms in a market to deter MARKET ENTRY by potential competitors. Entry deterrence strategies could focus on creating high entry costs by acquiring patents for products and processes; intensive advertising to create brand loyalty; and lowering costs. Entry deterrence strategies could also focus upon heightening entrant's expectations about the intensity of post-entry pricing by LIMIT PRICING or maintaining excess capacity Such entry deterrence strategies serve to heighten BARRIERS TO ENTRY and limit COMPETITION.
References in periodicals archive ?
In addition to a simple entry deterrence strategy, a possible cause for this strategic investment behaviour may be that municipalities have a broader, i.
carriers in airline markets: a simultaneous game with complete information and two sequential games with or without strategic entry deterrence.
However, when the incumbent can use the breadth of her patent to deter market entry she maximizes expected returns by claiming the smallest patent breadth possible that could achieve entry deterrence.
Some specific topics examined include an analysis of bidding in Ohio school milk markets, cartel stability with multiproduct firms, empirical methods in merger analysis, evidence from the US beer industry on the competitive effects of exclusive dealing, and entry deterrence in hospital procedure markets.
However, the final effect of the entry deterrence strategy on total consumer surplus is not always positive.
But, apart from this (illicit) goal, one can distinguish between three main objectives for bundling: price discrimination, cost savings and entry deterrence.
2 can be extended to a discussion of the Dixit-Spence model of entry deterrence.
In this section we explore the entry deterrence effect of investments which bear significant sunk costs and potentially raise rivals' costs.
One significant opportunity for using a strategy of entry deterrence that may be emerging in retail banking is for a major bank(s) in a market to establish exclusive contracts for minibranches in the major grocery or other retail chains that have outlets throughout the market.
Competition policy, then, should focus its efforts, first and foremost, on eliminating government-created entry barriers; second, on minimizing natural barriers; and third on prohibiting anticompetitive, entry deterrence by dominant firms.
1982]: 'Predation, Reputation, and Entry Deterrence, Journal of Economic Theory, 27, pp.
The remainder of the first volume is devoted to major contributions to the theory of pricing and is organized into sections concerned with the pricing of product lines and related issues, consumer knowledge and learning, collusion, and the use of pricing for entry deterrence and predation.