Structural characteristics(1) Characteristics that reduce the profitability of entry are called entry barriers Entry deterrence requires that an entrant anticipate negative profits postentry An entrants profits postentry will depend on structural characteristics and the nature of competition postentry The natur of competition postentry will clearly be a function of the behavior of the incumbent the more credible threats by incumbent to act aggressively postentry, the lower the entrants profits By credibility we mean that it is profit-maximizing-When faced with actual entry-for the incumbent to behave aggressively either by maintaining production levels or charging low prices The credibility and profitability of aggressive behavior will depend on the structural conditions of the industryStructural characteristics (1) • Characteristics that reduce the profitability of entry are called entry barriers. • Entry deterrence requires that an entrant anticipate negative profits postentry. • An entrant’s profits postentry will depend on structural characteristics and the nature of competition postentry. • The natur of competition postentry will clearly be a function of the behavior of the incumbent. The more credible threats by incumbent to act aggressively postentry, the lower the entrant’s profits. By credibility we mean that it is profit-maximizing-when faced with actual entry-for the incumbent to behave aggressively either by maintaining production levels or charging low prices. • The credibility and profitability of aggressive behavior will depend on the structural conditions of the industry