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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005