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What is the most important barrier to entry in any market and why?
What is the most important barrier to entry in any market and why?
Expert Solution
The most important barriers to entry in any market can be:
Economies of scale: for a new firm to enter, it is important to stand firm in front of the already existing firms. For this, they must pick strategies to expand their market share by charging low prices. The already existing firms may drop their prices even lower to act as barrier in the entry of new firms.
Access to raw material: Until we don't have the access to raw material, we cannot enter a market to run our business or firm.
Government support: If the government has given its patent rights to an already existing firm, the entry of new firms would be deterred. Therefore, it is important for the government to support new entrants by giving subsidies or any other support to eliminate the barriers to entry.
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