156 PETER ACTON
two talents and the least expensive at 1,000 drachmas.^40 The largest industrial
valuation we hear of is of Pantaenetus’ ore processing operations at just over
three talents (Dem. 37.31), so the capital needs of even the largest workshops
were probably not much more than the minimum amount needed to perform
liturgies.^41 Mining leases were sufficiently affordable to be acquired primarily
by ‘prosopographic non-entities.’^42 Building a trireme was expensive, but the
cost was assumed by the state; construction was conducted by naval architects,
perhaps using slave gangs to assemble the boats at the Peiraeus and sourcing
wood, textile and metal components from independent workshops.^43 The pro-
cess for managing large building projects was state funded and similarly relied
on contracted tradesmen and teams.^44 Even where investment was large, asset
turn would not have been a basis for competitive differentiation; slaves of
similar accomplishments and productivity probably cost similar amounts and
competing on the basis of lower non-labour assets is generally only possible
with technological innovation.^45 To the extent asset investment played a role in
competition among Athenian firms, it was as a barrier to entry in a few spe-
cific segments.
Barriers to entry (forms of advantage that accrue to incumbents against
potential new entrants) are important because if there is nothing to restrict new
entry in a particular industry, no established firms can accumulate enough vol-
ume on a reliable basis to make expansion worthwhile. If a firm grows beyond
the minimum size for efficiency, it must be protected in some way against new
competitors who would otherwise win the volume it needs to justify expan-
sion. Some barriers are simple extensions of advantages among existing com-
petitors, such as returns to scale in processing, access to capital, brand-strength,
switching costs for customers or access to raw materials. In each case, stronger
competitors will tend to earn better returns than weaker ones; in some cases
the advantages are so great that a new entrant (naturally a weak position) can-
not hope to survive. Other barriers to entry keep competition out through
institutional restrictions or by pre-empting an important location where there
is only room for one competitor. The analysis that follows shows that many of
these types of barrier were found in Classical Athens.^46
Lacking scope for competitive advantage in costs or asset turn, in most
manufacturing sectors in Athens the only way for one firm to do better than
its competitors was by making products that customers preferred to those of
other competitors. The preferred firm could either charge higher prices or
rely on the extra demand to keep its workshop busy when others were idle;
most sensible people would do a bit of both. Using the concept of competi-
tive advantage (specifically product differentiation) and its special case, barriers
to entry, one can derive a framework, illustrated in Figure 6.3, to identify the
conditions under which firms in a given industry will be able to win enough
market share to become quite large.^47