Barriers to entry

<p>In theories of <a href="/facts/Competition_(economics)/zscsQx5l">competition</a> in <a href="/facts/Economics/HYctA2Dn">economics</a>, a barrier to entry, or an economic barrier to entry, is a <a href="/facts/Fixed_cost/BfGf8r1Q">fixed cost</a> that must be incurred by a new entrant, regardless of production or sales activities, into a <a href="/facts/Market_(economics)/6RfCU3fH">market</a> that incumbents do not have or have not had to incur.
Because barriers to entry protect incumbent firms and restrict competition in a market, they can contribute to distortionary prices and are therefore most important when discussing <a href="/facts/Competition_law/cq7hKYN4">antitrust</a> policy. Barriers to entry often cause or aid the existence of <a href="/facts/Monopolies/BXIQWUmR">monopolies</a> and <a href="/facts/Oligopoly/SDh6loza">oligopolies</a>, or give companies <a href="/facts/Market_power/oyYb7b3L">market power</a>.
Barriers of entry also have an importance in industries. First of all it is important to identify that some exist naturally, such as <a href="/facts/Brand_loyalty/C3rtcpYS">brand loyalty</a>.
Governments can also create barriers to entry to meet <a href="/facts/Consumer_protection/FYPsrrcc">consumer protection</a> laws, protecting the public. In other cases it can also be due to inherent scarcity of public resources needed to enter a market.
</p>

Barriers to entry open-in-new

Barriers to entry