Barriers to entry
Definition. Barriers to entry are obstacles that make it difficult or costly for new firms to enter an industry and compete with established producers. They allow incumbent firms to earn supernormal profit in the long run and underpin market structures such as monopoly and oligopoly.
Examples include large economies of scale, control of essential inputs, patents, high set up costs and brand loyalty. The higher the barriers, the less contestable the market.
This term belongs to Barriers to Entry in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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