Discuss how new entrants are deterred from entering a competitive market.
There are several things that can deter new entrants from entering a competitive market.
If the market consists of a high level of product differentiation, new entrants are discouraged from entry. Price is no longer a factor in this type of market as consumers are focused on the “brand equity” of the products being sold. In addition, some competitive markets insulate their participants from new entrants through service and quality differentiation.
Cost advantages through such things as economies of scale, proprietary technologies, or
control of raw materials can also deter new entry in competitive markets.
There are several things that can deter new entrants from entering a competitive market.
If the market consists of a high level of product differentiation, new entrants are discouraged from entry. Price is no longer a factor in this type of market as consumers are focused on the “brand equity” of the products being sold. In addition, some competitive markets insulate their participants from new entrants through service and quality differentiation.
Cost advantages through such things as economies of scale, proprietary technologies, or
control of raw materials can also deter new entry in competitive markets.
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