Factors that limit the flow of new entrants into profitable markets. One example of a barrier may be direct government restrictions on entry. A second example would be large economies of scale in relation to the size of a market so that an entrant would need to enter at a large size and with a consequent large addition to industry output. In that case, a potential entrant might forego entry into a market in which incumbents are making large profits because the entry itself would substantially drive prices down and cause losses for the entrant. A third example would be lack of access of potential entrants to key raw materials or production technology. A fourth example would be slow response of buyers to lower prices or improved quality of a product.
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Economies Of Scale
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Economies Of Scale
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