What are Barriers to Entry?
- Barriers to entry are conditions that prevent firms from freely entering or exiting a market
How Do I Remember It?
- Think of barriers to entry as “entry barriers.” They are like hurdles or obstacles that new firms must overcome to enter a market and compete with existing firms.
Real World Example
- For example, the pharmaceutical industry has high barriers to entry due to the extensive research and development costs required to bring a new drug to market. Additionally, strict regulations and the need for approval from regulatory authorities create barriers that limit the entry of new firms into the market.
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By: Ryan Aquino
