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Barriers to Competition: Keeping Competitors Out

Please provide assistance by providing short answers to the questions following the text.


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1. If you offer lower prices and better services, your revenue goes down and your costs go up. That means lower profits. If you can keep the competition from entering the market, you can continue to charge the same profit for the same services, which would mean you keep your entire profit.

2. The federal government can impose restrictions over ...

Solution Summary

Keeping the competition out is chapter 20 of a book. In it the many things that companies and groups do to try to keep the competition out are discussed. The chapter asks three questions which are answered here:

1. In the first one we discuss the benefits and set backs of two possible ways of keeping the competition out, either by becoming extremely competitive or by lobbying successfully for protectionism.

2. In the second one we discuss why protectionism is more likely at the federal level than at more local government.

3. Finally, we compare the social benefits of prohibiting entry for competitors with imposing a special tax on them.