Advances in Economics and Business
Market turnover includes two interrelating procedures, playing a very important role in the industrial organization: firm entry and exit of the market. The question what favors and what prohibits a firm to enter the market place and the relationship between its entry and exit, are in the scope of industrial dynamics. An approach of firms' entries and exits in an industrial market, can be seen under the prism of the life cycle of a product. The innovations and the technical changes are very
... tant factors, driving a firm to make the decision either to enter or exit the market .In this paper we will examine the theories involving the market entries and exits of the firms. Also, we will analyze the nature and the components of the entry and exit barriers. The market looks like a football pitch surrounded by complex and different size gates. Firms intending to enter or exit the market have to leap over these gates. In a way, the gates can act as a barrier, increasing or decreasing in height, not for the firms in on the pitch, but for those outside intending to enter. According to the theory, the factor influencing the entry is the market structure, while the exit is influenced by the industrial development. Firms' entries and exits are characterized by asymmetry and interrelation, creating in a way the revolving door phenomenon, where someone enters and somebody else exits, because every entry includes an exit in a future moment. The existence of barriers is leading firms to develop entry or exit strategies. There are models based on game theory, on the technological situation in the market and on the fact the firm has one or more plants.