Barriers+to+Entry

Barriers to Entry

Barriers to entry are things that impede entry by firms into an industry. Some examples of barriers to entry are patents, economies of scale, control of a vital resource and licenses. Barriers to entry are one of the requirements of a monopoly as they keep firms from entering the market and keep one firm the sole producer of a good. Barriers to entry exist in industries such as cable service, utilities, and the selling of diamonds. Barriers to entry do not exist in perfect competition, where firms can enter or exit the industry to remove all economic profits. Barriers to entry also allow continuing economic profits to be made by monopolies as no firms can enter the industry and remove them. Links: http://en.wikipedia.org/wiki/Barriers_to_entry http://www.inc.com/magazine/20011001/23475.html http://www.1000ventures.com/business_guide/crosscuttings/competing_barriers_to_entry.html



Patents are a barrier to entry.

Links: http://en.wikipedia.org/wiki/Barriers_to_entry http://www.inc.com/magazine/20011001/23475.html http://www.1000ventures.com/business_guide/crosscuttings/competing_barriers_to_entry.html

Which of the following is not a barrier to entry? a. Patents b. Limit Pricing c. Advertising and Marketing d. Many firms in the industry

The answer is d.