potential entrant

potential entrant

a FIRM that is willing and able to enter a MARKET given the right conditions. In the THEORY OF MARKETS, potential entry turns into actual entry into a market when:
  1. existing firms in the market are earning ABOVE-NORMAL PROFITS;
  2. newcomers are able to overcome any BARRIERS TO ENTRY.

‘Actual’ new entry plays an important regulatory role in a market in removing above-normal profits and in expanding market supply (see, for example, PERFECT COMPETITION). However, the mere ‘threat’ of potential entry may in itself be sufficient to ensure that existing firms supply the market efficiently and set prices that are consistent with supply costs.

Potential entrants to a market may be newly established firms, firms that currently supply the market with inputs or that are currently its customers (vertical entry), or firms that currently operate in other markets and are looking to expand their activities in new directions (diversified entry). See also CONDITION OF ENTRY, MARKET ENTRY, VERTICAL INTEGRATION, DIVERSIFICATION, CONTESTABLE MARKET.

References in periodicals archive ?
In some cases, the manufacturers of the patented products have settled with the potential generic entrant and agreed to share the profits from the patented product, sometimes for a period of years, if the potential entrant will delay production of a generic competitor.
A merger between an incumbent and a potential entrant can raise significant competitive concerns.
Once a potential entrant is successfully barred from a market, existing players are free to revert to their prior anti-competitive conduct.
The world-renowned SRI (Social Responsibility Investment) research company, the SAM Group, evaluates each potential entrant in collaboration with PricewaterhouseCoopers.
A new competing product may or may not be discovered, depending on the amount of R&D investments incurred by the incumbent and a potential entrant.
A potential entrant has to incur considerable entry-costs in an effort to serve a new market.
Plumbing giant Wolseley - another set for possible re-inclusion in the top tier after Wednesday's review - fared better, ahead 10p at 1083p, as did fellow FTSE 100 potential entrant 3i Group, up 8.
In each industry, there is an incumbent and a potential entrant.
We have a two-period model, where in the first period a buyer and seller sign a contract or not, and a potential entrant enters or not.
Some states also restrict the use of certain words or phrases in promotional materials and do not allow, for example, the sponsoring organization to state that a potential entrant is a finalist, grand prize recipient, or winner unless the statement is true.
As the potential entrant looks at the market they are targeting, they need to consider ALL of their potential competitors before they decide to enter.
It appears, therefore, that there are two kinds of entry gateways: entry gateways which are a result of the structural characteristics of the industry ("structural entry gateways") and entry gateways created by the unique set of skills, resources, and contacts possessed by the potential entrant ("resource entry gateways").

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