The Significance of Barriers to Entry in the Construction Industry

Gerard de Valence


Abstract

This research looks at the significance of barriers that firms considering entry into the construction industry might face. Drawing on the microeconomic characteristics of imperfectly competitive and oligopolistic markets the analysis finds that there are a dozen barriers to entry that affect the industry, but their significance depends on the product type. The discussion covers the question of product homogeneity in construction and evidence for the existence of barriers to entry in concentration levels. Barriers to entry specific to construction are then identified, which leads to an analysis of how they operate and their significance (high, medium or low) in different market types, thus increasing our understanding of construction industry dynamics.

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