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    Barriers to entry, globalization, oligopoly pricing

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    1. Other than economies of scale, what would you consider to be barriers to entry into a market? Are these barriers the same for all market structures? Explain your response.

    2. How does globalization lead to greater competition in the marketplace?

    3. Describe three oligopoly pricing models:
    a. the kinked-demand curve
    b. collusive pricing
    c. price leadership

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    Solution Preview

    Other types of barriers to entry are brand name recognition, resource ownership, patents, and licensing restrictions. If consumers are very familiar with brand names for some products, it could be difficult for new companies to compete by producing these products. Consumers will stay with the names they recognize, fearing that the strange newcomer might not meet their expectations. In order to introduce their product, the company might need to advertise extensively, which is an up front cost that could take time to recoop. If all of the resource necessary for production of a particular good is owned by the exisiting firms, then new firms will not be able to open. Patents are a legal barrier which prevent any other company from selling the protected product for a ...

    Solution Summary

    Barriers to entry in each market structure; how globalization encourages competition; three oligopoly pricing models