terça-feira, julho 14, 2009

464) Barreiras à entrada: artigo da The Economist

Barriers to entry, exit and mobility

The Economist, July 13th 2009

The idea that there are barriers preventing firms from entering markets and barriers preventing them from leaving requires that we view markets as similar to fields surrounded by gates of differing sizes and complexity. The gates have to be surmounted by firms wishing to enter or to leave.

To some extent the gates can be both raised and lowered, not just by those inside the fields but also by those outside wishing to enter. Typical barriers to entry include patents, licensing agreements and exclusive access to natural resources. A patented pharmaceutical, for instance, gives the patent holder exclusive rights for a certain period (usually a maximum of seven years) to manufacture and sell that pharmaceutical within a specified market.

The economies of scale (see article) that can be gained from being large and established in a particular field can also act as a barrier to entry. If new entrants calculate that they need to sell large volumes before they can hope to be competitive with existing firms, this acts as a deterrent to their ambition. When, for instance, did a new entrant last try to begin manufacturing for the mass car market?

Barriers to entry can also be erected by governments. Regulations covering the financial services industry are designed to act as a barrier to rogues and villains. But inevitably they also deter many honest businesses too. Forty years ago, foreign banks could not operate in Britain unless they had an office within walking distance of the Bank of England, then the industry’s regulator. Needless to say, property prices in the City of London’s “Square Mile” were among the highest in the world and acted as a powerful barrier to entry for newcomers.

Well-established firms in a particular field or market may be tempted to raise the barriers when they see a newcomer approaching their patch. They can do this, for instance, by lowering their prices, thus making the newcomers’ products less competitive. Moreover, lowering prices may be an easy option for the incumbents since their prices may have been higher than the free-market level because of the barriers.

Monopolies exist where there are insurmountable barriers to entry. If there were no (or only low) barriers, other firms would enter such markets to participate in the monopoly profits.

Barriers to exit make it more difficult for a company to get out of a particular business than it would otherwise have been. They include things like the cost of laying off staff, and contractual obligations such as the payment of rent. For a classic high-street bank with a large number of staff and a wide network of branches, the barriers to exit from traditional banking businesses can be considerable.

Paradoxically, firms sometimes decide for themselves to erect barriers that hinder their own exit from a market. This can be a strategic ploy designed to convey to their competitors the message that they are committed to that market, and that they are not going to leave it in a hurry.

Old ideas about barriers to entry were given a new twist with the development of e-commerce. By using the internet, firms can sometimes surmount traditional barriers with an ease not previously available. Economies of scale, for instance, do not apply in quite the same way.

Much of the deregulation of the 1980s and 1990s was designed by free-market-oriented governments to lower barriers to entry in industries ranging from airlines to stockbroking. But it had only limited success. A 1996 study of the airline industry by the American government’s General Accounting Office, for example, illustrated the complex way in which barriers to entry become tightly woven into the fabric of an industry. The study found that three things—namely, limits on take-off and landing slots at certain major airports; the existence of long-term leases giving airlines the exclusive use of airport gates; and rules prohibiting flights of less than a certain distance—continued to impede new airlines’ access to airports.

Despite this, in recent years a number of low-cost carriers have managed to some extent to circumvent these barriers by using secondary airports and by marketing tickets via the internet.
Further reading

Geroski, P., “Market Dynamics and Entry”, Blackwell, 1991

Geroski, P., Gilbert, R. and Jacquemin, A. (eds), “Barriers to Entry and Strategic Competition”, Harwood Academic Publishers, 1990

Karakaya, F. and Stahl, M.J., “Entry Barriers and Market Entry Decisions”, Quorum Books, 1991

Yip, George, “Barriers to Entry: A Corporate Strategy Perspective”, Lexington Books, 1982

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