Perfect Competition

Perfect Competition - PowerofRivalry:...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
David Bryce © 1996-2002 Adapted from Baye © 2002 Power of Rivalry: Economics of Competition and Profits MANEC 387 MANEC 387 Economics of Strategy Economics of Strategy
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
David Bryce © 1996-2002 Adapted from Baye © 2002 The Structure of Industries Competitive Rivalry Threat of new Entrants Bargaining Power of Customers Threat of Substitutes Bargaining Power of Suppliers From M. Porter, 1979, “How Competitive Forces Shape Strategy”
Background image of page 2
David Bryce © 1996-2002 Adapted from Baye © 2002 Distribution of Industry Profits Source: Compustat 1990-2000 0 5 10 15 20 25 30 35 40 45 50 -9% -7% -5% -2% 0% 2% 5% 7% 9% 12% 14% 16% 19% 20%+ Number of  Industries* *two-digit SIC
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
David Bryce © 1996-2002 Adapted from Baye © 2002 How Industry Structure Influences Profitability 0 20 40 60 80 100 Farmers 5-10% ROE Frozen Entree Makers 20-25% ROE Food Retailers Percent of Market Others (>10,000) ConAgra Stouffer Swanson Campbell Green Giant Others (>10) Safeway Kroger American Others (>1000) 34 25 17 4 20 90 2 3 4 1 99
Background image of page 4
David Bryce © 1996-2002 Adapted from Baye © 2002 The Threat of Rivalry Rivalry is the threat that firms will  compete away profit margins.  This  occurs through Price competition Frequent introduction of new products Intense advertising campaigns Fast competitive response Exit barriers
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
David Bryce © 1996-2002 Adapted from Baye © 2002 Sources of Increasing Rivalry Large number of competing firms of similar  size ( unconcentrated
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 19

Perfect Competition - PowerofRivalry:...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online