ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Barrier to Entry
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Start-Up Costs
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Price War
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Collusion
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Detailed explanation-1: -Barriers to entry is an economics and business term describing factors that can prevent or impede newcomers into a market or industry sector, and so limit competition. These can include high start-up costs, regulatory hurdles, or other obstacles that prevent new competitors from easily entering a business sector.
Detailed explanation-2: -A monopoly is the most challenging market to enter. Below is the source of monopoly power which makes it difficult for other firms to enter; Legal barriers. For example, a company may patent its product to protect its self from competitors for a given period.
Detailed explanation-3: -There are 4 main types of barriers to entry – legal (patents/licenses), technical (high start-up costs/monopoly/technical knowledge), strategic (predatory pricing/first mover), and brand loyalty.
Detailed explanation-4: -Economies of scale. Product differentiation. Capital requirements. Switching costs. Access to distribution channels. Cost disadvantages independent of scale. Government policy. Read next: Industry competition and threat of substitutes: Porter’s five forces.
Detailed explanation-5: -Advertising and Marketing. Capital Costs. Monopolization of Resources. Cost Advantages (excluding economies of scale) Customer Loyalty. Distribution. Economies of Scale. Regulatory Barriers. More items