descriptive analysis of barriers to entry in South African markets

Abstract

Over the past few years, the ease and likelihood of doing business in South Africa have deteriorated due to various factors, including the political and economic environment. At the lower level, rival firms face significant barriers to entry, which is the focus of this study. Using secondary data from the Competition Commission of South Africa, this study performs an in-depth analysis of barriers to market entry in South Africa. The findings reveal that barriers to entry are more prevalent in intermediate and larger mergers than in small mergers. Strategic barriers at the lower level are dominated by technical know-how, substantial investment in marketing, and long-term contracts. Regulatory barriers, on the other hand, are mainly driven by licensing, registration restrictions, exclusive rights, and standards and safety requirements. Structural barriers include capital investment costs, economies of scale, and initial start-up costs, the chief barriers rival firms face. When stratified by economic sector, the findings indicate that the manufacturing, real estate, wholesale, and retail trade sectors are characterised by significant barriers to entry.