Analysis of price and entry barriers to bespoke-purpose application markets through static Bayesian game

Document Type : Original Article


Lecturer at Faculty of Literature and Social Science, Kurdistan University, Sanandaj, Iran


We model the interplay Entry barriers are structural variables that play an important role in explaining market power and unconventional profit. The causes and sources of entry barriers may be technical, legal issues or conditions of the market. In this research, the cause of entry barrier in the market of bespoke-purpose applications is assumed to be lack of differentiation in production. This entry barrier is structural and supply-side where entrance is blocked in a range of prices. In this article, the price of corresponding application and maximum entry forestalling price to the market was calculated through static Bayesian game and assuming lack of knowledge of computer companies about future demand. The results indicate that in case of software demand in more than one stage, maximum entry barrier price and consequently the height (intensity) of entry barrier increase with  respect to an increase in the number of stages. In this case, the buyer will suffer from extra costs compared to purchase at once, and the increase in the number of these steps leads to a rise in the imposed costs.


Abduli, Q. (2012). Game theory and its applications (incomplete information, evolutionary and collaborative games). Tehran: SAMT.
Arrow, K. (1962). The Rate and Direction of Inventive Activity: Economic and Social Factors. In Economic Welfare and the Allocation of Resources for Invention (Vol. 14, pp. 609 - 26). New York: Princeton University Press.
Bain, J. S. (1956). Barriers to new competition: Their character and consequences in manufacturing industries. Cambridge: Harvard University Press.
Bass, F. M., Cattin, P., & Wittink, D. R. (1978, February). Firm Effects and Industry Effects in Analysis of Market Structure and Profitability. Journal of Marketing Research, 15(1), 3-10.
Baumol, W. J., & Willig, R. D. (1981, Aug). Fixed Costs, Sunk Costs, Entry Barriers and Sustainability of Monopoly. The Quarterly Journal of Economics, 96(3), 405-31.
Beatty, R. P., Reim, J. F., & Schap, R. F. (1985, Spring). The Effect of Barriers to Entry on Shareholder Interstate Wealth: Implications for Banking. Journal of Bank Research, 16, 8-15.
Brozen, Y. (1971, Oct). Bain's Concentration and Rates of Return Revisted. The Journal of Law & Economics, 14(2), 351-369.
Comanor, W. S., & Wilson, T. A. (1967, Nov). Advertising, Market Structure and Perform ance. The Review of Economics and Statistics, 49(4), 423-40.
Demsetz, H. (1982, Mar). Barrier to Entry. The American Economic Review, 72(1), 47-57.
Demsetz, H. (1982, Mar). Barrier to Entry. The American Economic Review , 72(1), 47-57.
Eaton, B. C., & Lipsey, R. G. (1980, Autumn). Exit Barriers and Entry Barriers: The Durability of Capital as a Barrier to Entry. The Bell Journal of Economics, 11(2), 721-9.
Harrigan, K. R. (1981, October). Barriers to Entry and Competitive Strategies. Strategic Management Journal, 2(4), 395-412.
Henderson, B. D. (1984). The Application and Misapplication of the Experience Curve. Journal of Business Strategy, 4(3), 3-9.
Hofer, C. W., & Schendel, D. (1978). Strategy Formation: Analytical Concepts. St. Paul, MN: West Publishing Company.
KhodadadKashi, F. (2012). Industrial economy (theory and application). Tehran: SAMT.
King, R. H., Arthur, A., & Thompson, J. R. (1982, September ). Entry and Market Share Success of New Brands in Concentrated Markets. Journal of Business Research, 10(3), 371-83.
Krouse, C. G. (1984, October). Brand Name as a Barrier to Entry: The Realemon Case. Southern Economics Journal, 51(2), 495-502.
Kyle, A. S., & Dixit, A. K. (1985, March). The Use of Protection and Subsidies for Entry Promotion and Deterrence. The American Economic Review, 75(1), 139-52.
Lipczynski, J., Wilson, J., & Goddard, J. (2005). Industrial Organization: Competition, Strategy, Policy, third Edition, Pearson Education. London: Prentice Hall.
Needham, D. (1976, Sep). Entry Barriers and Non-Price Aspects of Firms' Behavior. The Journal of Industrial Economics, 25(1), 29-43.
Porter, M. E. (1980, Jul. - Aug). Industry Structure and Competitive Strategy: Keys to Profitability. Financial Analysts Journal, 36(4), 30-41.
pressman, R. S. (2010). Software Engineering: A Practitioner's Approach (Vol. fifth edition). New York: McGraw-Hill.
Sadraei Javaheri, A. (2011). Industrial economy. Tehran: Industrial Management Organization.
Scherer, F. M. (1970). Industrial Pricing: Theory and Evidence. Chicago: Rand Mc Nally .
Schmalensee, R. (1982, Jun). Product Differentiation Advantages of Pioneering. The American Economic Review , 72(3), 349-365.
Shaanan, J. (1988, Jan). Welfare and Barriers to Entry: An Empirical Study. Southern Economic Journal, 54(3), 746-762.
Shepherd, W. (1997 ). The Economics of Industrial Organization: Analysis, Markets, Policies. Mishawaka: Prentice Hall.
Shy, O. (1995). Industrial organization: theory and applications. Cambridge: MIT Press.
Smiley, R. H., & Ravid, A. S. (1983, May). The Importance of Being First: Learning Price and Strategy. Quarterly Journal of Economics, 98(2), 353-62.
Souri, A. (2012). Game Theory and Its Applications. Tehran: University of Economic Science.
Zahedi, A. (2014). Laws and regulations governing public transactions (bidding-tendering). Tehran: Javedaneh, Jungle.