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.