Sub: Economics Topic: Micro Economics
Question:
The different types of barriers to entry an oligopolist might try to create.
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Describe the different types of barriers to entry an oligopolist might try to
create.
Solution:
Describe the different types of barriers to entry an oligopolist might try to create.
In those industries, three or four firms might each have major sufficient sales to achieve
economies of scale, but new firms would have such a small market share that they could not do
so. They would then be high cost of producers, and as such they could not survive. A closely
relative barrier is the large expenditure for capital, the cost of obtaining necessary plant and
equipment, required for entering the industry. They use merging policy to create more market
share and profit at low cost of production. It would restrict the new firm from industry.
** End of the Solution **
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