Perfect competition

Barriers to Entry

• Things that prevent new firms from entering and competing in imperfectly competitive industries include:

• Economies of scale and other cost advantages enjoyed by industries that have large capital requirements. A large initial investment, or the need to embark in an expensive advertising campaign, deter would-be entrants to the industry. Ex : steel plants tend to require immense initial investment

Barriers to Entry

• Things that prevent new firms from entering and competing in imperfectly competitive industries include:

• Ownership of a scarce factor of production: If production requires a particular input, and one firm owns the entire supply of that input, that firm will control the industry. Ex : the firm owns all the uranium in the world and thus bars others from entry into the uranium market, Aluminum company of America owned almost every source of bauxite