Barriers To Entry

HideShow resource information
  • Created by: AnnieFH
  • Created on: 13-12-15 14:04
View mindmap
  • Barriers To Entry
    • Innocent/ Natural Barriers to Entry
      • HIGH START UP COSTS = Firms may have to pay a large capital sum in order to enter the industry
      • SUNK COSTS = Costs that cannot be recovered with leaving an industry e.g. Machinery
      • SCALE ECONOMIES = In some industries, economies of scale are very large therefore if they enter the market and cannot produce at its minimum efficiency scale, it will be at a cost disadvantage
    • Legal Barriers to entry
      • LICENSES = The government may require firms to have a license in order to operate in a certain industry
      • PATENTS = The government may give exclusive rights of production to certain firms e.g Post Office forbids any other private firm posting mail valued under 50p
    • Strategic Barriers To Entry
      • MARKETING BARRIERS = High levels of advertising in some industries can deter new firms from entering due to high levels of competition and costs
      • LIMIT PRICING = A firm may decide to prevent competition from entering the market by setting their prices below that of their potential rivals
      • RESTRICTIVE PRACTICES = An example of a restrictive practice would be a firm refusing to sell goods to a retailer if they stock their competators goods also


No comments have yet been made

Similar Economics resources:

See all Economics resources »See all Barriers to Entry resources »