Market Structure, Barriers to Entry and Competition in Construction Markets

Abstract

This paper uses the four types of market structure found in microeconomics to analyse the construction industry. In the traditional structure-conduct-performance model the existence and height of barriers to entry are the key determinants of the number of firms in any specific market. Markets for buildings and structures do not, however, fit the requirements of substitutability and homogeneity found in economic theory. Therefore changes to both the methods used in analysis of competition in construction markets and the application of competition theory to the industry may be necessary.