How do barriers to entry help monopolies maintain power?

A monopoly is a firm with a majority market share in a particular industry. Barriers to entry are things that stop potential new entrants from entering the market, thus keeping competition in monopolistic markets low and as a results allows monopolies to maintain their power.

Examples are; economies of scale - lower average cost as output rises due to bargaining power, experience etc. New entrant won't be able to charge a price as low as the monopoly. High start up costs (technology, energy) brand loyalty (coca-cola/apple) network effects (facebook)

Answered by Navjyot D. Economics tutor

8241 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

Explain how rising interest rates affect consumption


Using Figure 5, assess whether the decision to install the machine (used in production in an independent fast food shop) will be beneficial for the business and the workers.


With the help of a diagram, explain the cause of demand-deficient unemployment.


Which one of the following is the most likely consequence of an increase in the division of labour in the production of smartphones?


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo
Cookie Preferences