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

8416 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

How does the World Trade Organisation (WTO) benefit developing countries?


The National Living Wage (NLW) government policy target is to increase the NLW to £9 per hour by 2020. Explain two possible impacts of this policy on the UK supermarket industry.


What is excess supply?


Evaluate one reason why trade may be beneficial for an economy (5 marks)


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