A descriptive analysis of barriers to entry in South African markets
Article Sidebar
Main Article Content
Abstract
Over the past few years, the ease and likelihood of doing business in South Africa have deteriorated due to various factors, including the political and economic environment. At the lower level, rival firms face significant barriers to entry, which is the focus of this study. Using secondary data from the Competition Commission of South Africa, this study performs an in-depth analysis of barriers to market entry in South Africa. The findings reveal that barriers to entry are more prevalent in intermediate and larger mergers than in small mergers. Strategic barriers at the lower level are dominated by technical know-how, substantial investment in marketing, and long-term contracts. Regulatory barriers, on the other hand, are mainly driven by licensing, registration restrictions, exclusive rights, and standards and safety requirements. Structural barriers include capital investment costs, economies of scale, and initial start-up costs, the chief barriers rival firms face. When stratified by economic sector, the findings indicate that the manufacturing, real estate, wholesale, and retail trade sectors are characterised by significant barriers to entry.
Downloads
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
This work (article) is licensed under a Creative Commons Attribution 4.0 International License.
References
Audretsch, D.B. (2007). Entrepreneurship capital and economic growth. Oxford Review of Economic Policy, 23(1), 63–78. https://doi.org/10.1093/oxrep/grm001
Bain, J. S. (1951). Relation of profit rate to industry concentration: American manufacturing, 1936–1940. The Quarterly Journal of Economics, 65(3), 293-324. https://doi.org/10.2307/1882217
Bhandari, A. K. (2010). Concentration, entry barriers and profitability in the Indian industries: an empirical analysis. Journal of Quantitative Economics, 8(2), 61-80.
Buthelezi, T., Mtani, T., & Mncube, L. (2019). The extent of market concentration in South Africa’s product markets. Journal of Antitrust Enforcement, 7(3), 352-364. https://doi.org/10.1093/jaenfo/jnz014
Competition Commission. (2019). the grocery retail market inquiry final report-non-confidential. Retrieved from: https://www.compcom.co.za/wp-content/uploads/2019/12/GRMI-Non-Confidential-Report.pdf
Couto, A., & Barbosa, N. (2020). Barriers to entry: An empirical assessment of Portuguese firms’ perceptions. European Research on Management and Business Economics, 26(2), 55-62. https://doi.org/10.1016/j.iedeen.2020.02.002
Dwivedi, A. (2022). Role of SMEs in the Indian Economy: 4 Noteworthy Observations. Retrieved from: https://sabpaisa.in/blog/role-of-smes-in-the-indian-economy/
Hays, F. H., & Ward, S. G. (2011). Understanding Market Concentration: Internet-Based Applications from the Banking Industry. Journal of Instructional Pedagogies, 5.. Retrieved from: https://files.eric.ed.gov/fulltext/EJ1096952.pdf
Heger, D., & Kraft, K. (2008). Barriers to entry and profitability. ZEW-Centre for European Economic Research Discussion Paper, (08-071). https://doi.org/10.2139/ssrn.1268245
Islami, X., Islami, V., Topuzovska Latkovikj, M., & Mulloli, E. (2019). Barriers hindering the entry of new firms to the competitive market and profitability of incumbents. Management: Journal of Contemporary Management Issues, 24(2), 121-143. https://doi.org/10.30924/mjcmi.24.2.9
Keleme, M., & Moeketsi, N. (2020). Excessive pricing in the time of COVID-19: insights from a regulator's perspective. Market Conduct Division, Competition Commission of South Africa. Retrieved from: http://www.compcom.co.za/wp-content/uploads/2020/11/Excessive-pricing-in-the-time-of-COVID-19-insights-from-a-regulators-perspective-29.10.20-Final.pdf
Marshall, G., & Jonker, L. (2010). An introduction to descriptive statistics: A review and practical guide. Radiography, 16(4), e1-e7. https://doi.org/10.1016/j.radi.2010.01.001
Mncube, L. (2013). Strategic entry deterrence: Pioneer Foods and the bread cartel. Journal of Competition Law and Economics, 9(3), 637-654. https://doi.org/10.1093/joclec/nht004
Organization for Economic Co-operation and Development. (2018). Market Concentration. Working Paper No. DAF/COMP/WD(2018)46. Retrieved from: www.oecd.org/daf/competition/market-concentration.htm
Rahman, M., Lincoln, U. K., Uddin, M., & Lodorfos, G. (2017). Barriers to Enter into Foreign Markets: Evidence from SMEs in an Emerging Economy. International Marketing Review, 34(1), 68-86. https://doi.org/10.1108/IMR-10-2014-0322
Roberts, S. (2017). Barriers to entry and implications for competition policy. Competition Policy for the New Era–Insights from the BRICS Countries. https://doi.org/10.2139/ssrn.2982402
Sharma, S. (2019). Determining What Statistics to Use. PhD Thesis, Horizons University.
Smith, D. (2010). The role of entrepreneurship in economic growth. Undergraduate Economic Review, 6(1), 7.
Tufte, E. R. (2001). The visual display of quantitative information. 2nd. Graphics Pr, May.
Vickers, J. (2007). Competition law and economics: A mid-Atlantic viewpoint: The Burrell lecture of the competition law association, given in London on 19 March 2007. European Competition Journal, 3(1), 1-15. https://doi.org/10.1080/17441056.2007.11428447