Roger Dickinson was one of the titans of macromarketing who helped to develop the field during its first thirty years. A retailing scholar highly regarded for his professional insights, he was an e...

Evaluating the capital purchase of a new technology

Roger Dickinson (1929–2012)

Although the notion of "barriers to entry" plays an important role in economic theory and antitrust litigation, the substantial problems inherent in it are not fully appreciated. Much existing discussion of barriers hardly pauses to recognize the difficulties, and even more careful treatments of the subject proceed as if the definition of barriers can be tied quite easily to some purely objective measure of the cost of doing business.' The burden of this paper is to demonstrate that this is not so. The origin of the barriers concept is in the research custom of industrial organization economists during the post-World War II period. That custom was to seek monopoly explanations for data not obviously or directly implied by the perfect competition model. The perceived persistence of higher rates of return in some industries than in others was suggestive of barriers to entry, especially for industries exhibiting high levels of structural concentration. The equalization of profit rates through competition, however, is a proposition logically valid only with respect to investment on the margin of alternative economic activities. Only if all inputs are available in perfectly elastic supply does this imply equality between average profit rates. In addition, accounting profits are likely to be biased by the presence of uncapitalized assets, especially assets associated with advertising, research, and goodwill2 (see Lester Telser; Leonard Weiss; my earlier article). But my purpose here is not to probe these measurement problems nor to compare the merits of these explanations, but to examine the usefulness of the concept of barriers. Accordingly, I will ignore the possibility that factors other than barriers may partly or wholly explain the phenomena that the barriers notion seeks to explain.

Barriers to Entry

Managing as if Tomorrow Mattered

Recent findings presented in the finance and accounting literature have indicated that firms are using increasingly sophisticated capital budgeting techniques (Istvan [2], Klammer [3] and Fremgen [1]. The present paper discusses the results of a more recent survey of large U.S. firms that was conducted by the authors. The survey (presented in the Appendix) inquired about the capital budgeting techniques employed, the computation of the discount rate and of cash flows, and the method of estimating and adjusting for project risk. Section II describes the sample employed and presents the results of the survey. Section III compares the results to those of previous surveys and briefly examines the association between the survey findings and a number of firm economic variables. Section IV is a summary. [Авторский текст]

Survey and analysis of capital budgeting methods

Evidence suggests that effective use of the portfolio concept may improve financial performance. The authors discuss the implementation of the portfolio concept in large diversified firms, and review its use as both a tool of analysis and a complete system for strategic management.

Evaluating the capital purchase of a new technology

Citations

Roger Dickinson (1929–2012)

References

Barriers to Entry

Managing as if Tomorrow Mattered

Barriers to Entry

Survey and analysis of capital budgeting methods

Strategic Portfolio Management in the Multibusiness Firm

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