13.7.14

RETHINKING ENTRY BARRIERS.

When Joe Bain's Barriers to New Competition came out, a dealership network and brand recognition might have been greater impediments to start-up companies than the economies of large scale (several hundred thousand cars per year on the assembly line, and a product range that included starter cars, family sedans, and arriviste coupes.

Now comes Tesla Motors, at the moment clearly in the arriviste coupe segment, causing the legacy car company dealers fits.  What amuses, though, reading the gripes of the legacy car companies, is that the dealer networks that, in Professor Bain's work, fortified the incumbents, have now become parasitic on the car manufacturers.  Does it come as a surprise that state trade associations of dealerships are rent-seekers par excellence?

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