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Major barriers to entry into an industry

1. Discuss the major barriers to entry into a industry. Explain ow each barrier can foster monopoly or oligopoly.

2. What effect would a rule stating that university student must live in University dormitories have on the price elasticity of demand for dormitory space? What impact might this in turn ave onroom rates?

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1. Some examples of barriers to entry

Control of resources - If a single firm has control of a resource essential for a certain industry, then other firms are unable to compete in the industry.

Customer loyalty - Large incumbent firms may have existing customers loyal to established products. The presence of established strong brands within a market can be a barrier to entry in this case.

Economy of scale - Large, experienced firms can generally produce goods at lower costs than small, inexperienced firms. Cost advantages can sometimes be quickly reversed by advances in technology. For example, the development of personal ...