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Entry and Exit Conditions and Barriers

Indicate whether each of the following statements is true or false and document why.

A. A barrier to mobility is any factor or industry characteristic that creates an advantage for incumbents over new arrivals.

B. A barrier to entry is any factor or industry characteristic that creates an advantage for large leading firms over smaller nonleading rivals.

C. Barriers to entry and mobility sometimes result in compensating advantages for consumers.

D. A barrier to exit is any restriction on the ability of incumbents to redeploy assets from one industry or line of business to another.

E. Government actions that create barriers to exit can have the unintended effect of retarding industrial development.

Solution Preview

A. A barrier to mobility is any factor or industry characteristic that creates an advantage for incumbents over new arrivals.

False. A barrier to mobility is a factor that actually hinders free movement from one area to another, not necessarily new arrivals.

B. A barrier to entry is any factor or industry characteristic that creates an advantage for large leading ...

Solution Summary

The following posting helps answer various true and false questions about entry and exit conditions and barriers.

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