Corporate Profits and the Risk of Entry

摘要: ECONOMISTS have recently begun to assess the quantitative effect of risk on corporate rates return. Several studies analyzed relation between profitability large firms and amounts faced by firms.' But none has yet considered that might be related smaller, fringe within their respective industries. Most entry occurs a small scale entrepreneurs are likely estimate entering an industry basis performance existing firms. If these fail or unable consistently earn normal rate return, potential competitors may regard as "risky." The greater is this risk, ceteris paribus, less new will enter. In sense, acts barrier enabling excess profits without attracting competitors. Alternatively, can thought vehicle through which barriers work. For example, where significant economies exist, high and, therefore, protected from competition. Many characteristics traditionally been termed interpreted factors increasing amount Section I paper develops measure "entry risk" section II incorporates it into simple theoretical model large-firm profit rates. III discusses construction variables selection data for empirical estimation model, IV presents statistical results. Finally, in V, explaining such conventional scale, advertising, research development expenditures developed tested. conclusions implications study summarized VI.