Barriers To Entry


DEFINITION of 'Barriers To Entry'

The existence of high start-up costs or other obstacles that prevent new competitors from easily entering an industry or area of business. Barriers to entry benefit existing companies already operating in an industry because they protect an established company's revenues and profits from being whittled away by new competitors.


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BREAKING DOWN 'Barriers To Entry'

Barriers to entry can exist as a result of government intervention (industry regulation, legislative limitations on new firms, special tax benefits to existing firms, etc.), or they can occur naturally within the business world. Some naturally occurring barriers to entry could be technological patents or patents on business processes, a strong brand identity, strong customer loyalty or high customer switching costs.

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    The telecommunications sector consists of various subsectors, including wireless communication and fixed-line voice and data. ... Read Full Answer >>
  2. What barriers to entry exist in the utilities sector?

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  3. What metrics are most appropriate to evaluate companies in the aerospace sector?

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  4. How strong are the barriers to entry in the oil and gas sector?

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  5. How strong are the barriers to entry for new companies in the chemicals sector?

    The American chemical industry is a significant player in the economy of the United States and the rest of the world. Although ... Read Full Answer >>
  6. What parameters are required for a market to exhibit perfect competition?

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  7. What information should I look at on a publicly traded company for use in fundamental ...

    In finance, fundamental analysis focuses on estimating a company's value based on the underlying factors that affect its ... Read Full Answer >>
  8. What are the key barriers to entry for companies in the electronics sector?

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  9. What factors influence competition in microeconomics?

    From a microeconomics perspective, competition can be influenced by five basic factors: product features, the number of sellers, ... Read Full Answer >>
  10. What is the difference between a monopolistic market and perfect competition?

    A monopolistic market and a perfectly competitive market are two market structures that have several key distinctions, such ... Read Full Answer >>
  11. How do sunk costs create a barrier to entry for new firms?

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  12. What do high economic profits in a given industry suggest about that industry?

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  13. What barriers to entry exist in the financial services sector?

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