Barriers to entry definition

What does Barriers to entry mean?

The obstacles faced by potential entrants wanting to enter and compete in a new market, which will vary in type and complexity from market to market. Barriers to entry are normally considered by competition authorities in the course of assessing dominance under Article 102 TFEU and/or section 18 of the Competition Act 1998.

Legal barriers (such as existence of IPRs or the need for government licensing), necessity of economies of scale and the vertical integration of incumbents are all examples of barriers to entry faced by potential entrants. Markets that regularly experience new firm entry are likely to have low barriers to entry, compared with sectors such as aircraft manufacturing, for example, which has very high barriers to entry.

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