ABSTRACT
This chapter presents the birth of the economic idea known as 'barriers to entry' and discusses how this new proposal is capable of demonstrating that markets usually do not work in a perfect competitive way. It discusses about the Bain-Sylos-Modigliani theoretical model, and the empirical demonstration of their theories during the 1960s. Sylos paid attention to reform policy as a tool to guide structural and institutional change following the classical British tradition of political economy. The model of Joe Bain, Paolo Sylos Labini and Franco Modigliani works into the prices theory described above, using the theoretical Marshallian framework of production function and costs function. The Federal Trade Commission, founded in 1912, used these ideas in order to implement changes in the American market competitiveness. The chapter concludes with an argument about cross-section data and its limits in demonstrating the existence of barriers to entry.
