Analysis of price and entry barriers to bespoke-purpose application markets through static Bayesian game

Abstract

We model the interplay Entry barriers are structural variables that play an important role in explaining market power and unconventional profit. The causes and sources of entry barriers may be technical, legal issues or conditions of the market. In this research, the cause of entry barrier in the market of bespoke-purpose applications is assumed to be lack of differentiation in production. This entry barrier is structural and supply-side where entrance is blocked in a range of prices. In this article, the price of corresponding application and maximum entry forestalling price to the market was calculated through static Bayesian game and assuming lack of knowledge of computer companies about future demand. The results indicate that in case of software demand in more than one stage, maximum entry barrier price and consequently the height (intensity) of entry barrier increase with respect to an increase in the number of stages. In this case, the buyer will suffer from extra costs compared to purchase at once, and the increase in the number of these steps leads to a rise in the imposed costs.