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In the theories of competition in economics, strategic entry deterrence is when an existing firm within a market acts in a manor to discourage the entry of potential firms into the market. These actions create greater barriers to entry for any potential firms seeking to enter the market and ensure the incumbent firms retain a large portion of market share or market power. Such actions, include excess capacity, limit pricing, predatory pricing, predatory acquisition (hostile takeovers) and switching costs.[1][8][9][2][3] Although in the short run, entry deterring strategies might lead a firm operating inefficiently and potential make a loss, in the long run the firm will be able to better dictate market conditions to ensure profit maximization.
Barriers to entry are sometimes deemed anti-competitive and can be subject to various competition laws.
Strategies
The English term "debt" was first used in the late 13th century.Cite error: The opening <ref> tag is malformed or has a bad name (see the help page). The term "debt" comes from "dette, from Old French dete, from Latin debitum "thing owed," neuter past participle of debere "to owe," originally, "keep something away from someone," from de- "away" (see de-) + habere "to have" (see habit (n.)). Restored spelling [was used] after c. 1400.[1] The related term "debtor" was first used in English also in the early 13th century; the terms "dettur, dettour, [came] from Old French detour, from Latin debitor "a debter," from past participle stem of debere;...The -b- was restored in later French, and in English c. 1560-c. 1660." In the King James Bible, only one spelling, "debtor", is used. The word "debtor" appears four times and "debtors" appears five times in the KJV Bible. (Searches for the previous erroneous claim that the words detter, debter and debtour are all used in the KJV Bible each resulted in 0 words found.)Cite error: The opening <ref> tag is malformed or has a bad name (see the help page).[2]
Excess Capacity
Repayment
There are three main ways repayment may be structured: the entire principal balance may be due at the maturity of the loan; the entire principal balance may be amortized over the term of the loan; or the loan may be partially amortized during its term, with the remaining principal due as a "balloon payment" at maturity. Amortization structures are common in mortgages and credit cards.
Principal
Principal is the amount of money originally invested or loaned, on which basis interest and returns are calculated.[8]
Repayment
There are three main ways repayment may be structured: the entire principal balance may be due at the maturity of the loan; the entire principal balance may be amortized over the term of the loan; or the loan may be partially amortized during its term, with the remaining principal due as a "balloon payment" at maturity. Amortization structures are common in mortgages and credit cards.
Principal
Principal is the amount of money originally invested or loaned, on which basis interest and returns are calculated.[9]
Repayment
There are three main ways repayment may be structured: the entire principal balance may be due at the maturity of the loan; the entire principal balance may be amortized over the term of the loan; or the loan may be partially amortized during its term, with the remaining principal due as a "balloon payment" at maturity. Amortization structures are common in mortgages and credit cards.
In the theories of competition in economics, strategic entry deterrence is when an existing firm within a market acts in a manor to discourage the entry of potential firms into the market. These actions create greater barriers to entry for any potential firms seeking to enter the market and ensure the incumbent firms retain a large portion of market share or market power. Such actions, include excess capacity, limit pricing, predatory pricing, predatory acquisition (hostile takeovers) and switching costs.[1][2][3][4][5] Although in the short run, entry deterring strategies might lead a firm operating inefficiently and potential make a loss, in the long run the firm will be able to better dictate market conditions to ensure profit maximization.
Barriers to entry are sometimes deemed anti-competitive and can be subject to various competition laws.
- ^ a b Cite error: The named reference
:0was invoked but never defined (see the help page). - ^ a b Cite error: The named reference
:1was invoked but never defined (see the help page). - ^ Salop, Steven C (1979). "Strategic entry deterrence". The American Economic Review. 69 (2): 335–338.
- ^ Bagwell, Luarie Simon (1991). "Share repurchase and takeover deterrence". The Rand Journal of Economics: 72–88.
- ^ Klemperer, Paul (1987). "Entry deterrence in markets with consumer switching costs". The Economic Journal. 97: 99–117.