TY  - JOUR
AU  - Carlton,Dennis W.
TI  - Barriers To Entry
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11645
PY  - 2005
Y2  - October 2005
UR  - http://www.nber.org/papers/w11645
L1  - http://www.nber.org/papers/w11645.pdf
N1  - Author contact info:
Dennis W. Carlton
Booth School of Business
University of Chicago
5807 S. Woodlawn Ave.
Chicago, IL 60637
Tel: 847/217-6000
Fax: 312/322-0262
E-Mail: dennis.carlton@chicagobooth.edu
AB  - This paper analyzes the concept of barriers to entry. It explains that the concept is a static one and explores the inadequacy of the concept in a world with sunk costs, adjustment costs and uncertainty. The static concept addresses the question of whether profits are excessive. The more interesting and relevant question is how fast entry or exit will erode profits or losses and how do the bounds that entry and exit place on price vary with uncertainty and sunk cost. Intuition based on the static concept of barrier to entry can be misleading in many industries.
ER  -