This book is a comprehensive discussion of entry, and the dynamics of market structure and performance that are associated with it. Much of the work is empirical, and a wide variety of econometric results and case studies are brought together in order to evaluate existing theories of entry, and map out future directions of empirical and theoretical research.
The book starts with an examination of data taken from a number of countries on the incidence of entry and exit in markets, and on the post-entry penetration and survival rates of new competitors in markets. A wide variety of models of entry are then critically examined with a view to assessing their ability to account for the salient features of the data. Following this, the effect of entry on market performance is assessed in three stages: the short run effects of entry on the dynamics of prices and margins; the height of entry barriers in the long run; and the relationship between entry and innovation. Each of these topics is explored using both case studies and econometric models drawn from a wide variety of countries and industries, and, in all three cases, a number of broad presumptions about the effects of entry emerge fairly clearly from the data.
Although entry and exit are part of a process of net expansion or contraction in industry supply, the data make it plain that an interesting feature of the entry process is one of the selection between firms and the major or minor innovations that they bring to the market. The book concludes with a number of broader observations on market selection processes.
