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Barriers to entry are obstacles that make it difficult for new competitors to enter a market. Dominant firms in an industry with high barriers to entry typically have the ability to command high prices due to their market power. Barriers to entry including things like know-how, technology, government regulation, reputation and location. It also includes industries that involve large investments or that require difficult to acquire assets such as the land owned by railways that may stretch for thousands of kilometers. High barriers to entry may lead to a monopoly where one firm has control of a market with an ability to charge high prices. |
Type | | Definition | Obstacles new firms face to entering a market or industry. | Examples | Cost of property, plant and equipment.
Know-how and qualified staff.Permits, licenses and regulatory approvals.Patents and trade secrets.Lack of industry or political connections | Related Concepts | |
Economics
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