barriers to entry : The New Palgrave Dictionary of Economics

barriers to entry

From The New Palgrave Dictionary of Economics, Second Edition, 2008

Edited by Steven N. Durlauf and Lawrence E. Blume

Abstract

The precise definition of barriers to entry is controversial; different versions have been proposed over the years. The issue is not one of pure semantics, since evidence of barriers to entry plays an important role in merger review and other areas of antitrust policy. One definition that seems to reflect current thought and practice is as follows: barriers to entry are structural, institutional and behavioural conditions that allow established firms to earn economic profits for a significant length of time.

Keywords

absolute cost advantage; antitrust; asymmetric information; barriers to entry; collusion; contracts as barriers to entry; excess capacity; game theory; limit pricing; merger analysis; oligopolistic competition; patents; predatory pricing; product differentiation; scale economies; sunk costs

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How to cite this article

Cabral, Luís M. B. "barriers to entry." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 09 February 2010 <http://www.dictionaryofeconomics.com/article?id=pde2008_B000077> doi:10.1057/9780230226203.0100