Who Deters Entry? Evidence on the Use of Strategic Entry Deterrents

To deter entry into new product markets, firms most often use the creation of product loyalty through advertising, and the preemption of markets through numerous and broad patents. Filling all product niches, masking the results for highly profitable divisions, and advertising are used most frequently for existing products. For newly developed products, strategic entry deterrents are used more often when markets are concentrated, populated by large firms, and research intensive. Strategic entry deterrents for existing products are used in concentrated, research intensive markets, but firm size has no effect. Firms develop strategies to deter entry less when other barriers exist.