ABSTRACT
This chapter refers to the economic literature about barriers to entry during the 1970s. It covers new theoretical models that tried to disconfirm the Bain-Sylos Labini paradigm. At the same time, when rivalry among firms grows the prices fall, in the Bain-Sylos model the limit price exists because the industry can reduce the price under threats to the new entrants. In the 70s the excess of capacity as a measure of barriers to entry was the most successful proposal. The major substantive changes in the optimal pricing strategy resulting from growth of the product market are that the equilibrium price is raised above the limit price, and the dominant firms with no cost advantage no longer price themselves out of the market in the long-run. Industrial concentration works as a barrier to entry because of its repercussions on profit concentration and in the randomness of agreement between incumbents to maintain established market share, shortly collusion.
