There are a number of ways that firms in an industry can keep the number of new entrants low. These techniques are referred to as barriers to entry. A barrier to entry is a condition that creates a disincentive way for a new firm to enter an industry. The six major sources or barriers to entry:
- Economies of scale,
- Product differentiation,
- Capital requirements,
- Cost advantages independent of size,
- Access to distribution channels, and
- Government and legal barriers.
More from this Section
- Product and trademark franchise
A product and trademark franchise is an arrangement under which the franchisor grants ...
- Small Business Administration (SBA)
Small Business Administration (SBA) is the principal government agency concerned with ...
An opportunity is a favorable set of circumstances that creates a need for a new product, ...
- Multidomestic Strategy
Multidomestic strategy is an international expansion strategy in which firms compete for ...
- Assumptions Sheet
Assumption sheet is an explanation of the most critical assumptions based on general information, ...