ABSTRACT
Having explored the major sources of entry barriers individually in Section III, it is time to assess the height of barriers overall, and thus the conditions of entry facing putative challengers. This is not quite as simple as ‘summing up’ the heights of the barriers created by product differentiation, scale economies, and absolute cost advantages because, as we have seen, these individual barriers derive much of their strength by interacting with other factors including, of course, the behaviour of incumbents. For example, modest scale economies can completely rule out entry in geographically segregated markets or in an already densely packed product space if established firms price aggressively in response to new competition. Introductory advertising campaigns can be impossibly expensive if consumers are reluctant to experiment with new suppliers. Finally, the combination of scale economies and the need for extensive pre- and post-sales servicing can force entrants to enter as a fully integrated concern, capital markets permitting. The point is that it is misleading to consider the effects of various types of barriers taken separately; it is the joint effect of all types of barriers taken together which is of interest.
