The first barrier to entry found in the article is the supply-side economies of scale. These scales arise when incumbents produce larger volumes of their product for a lower total cost. This can occur if they spread their fixed costs over more units, utilize a more efficient technology or are on better terms with their suppliers.
What are the types of entry barriers in a market?
There are two types of entry barriers in a market, both of which we shall look at in detail. 1. Natural Barriers to Entry Economies of Scale: Economies of Scale mean that firms can spread fixed costs over larger production (infrastructure) and more customers.
What is the difference between high entry barriers and low exit barriers?
These markets combine the attributes: Markets with high entry barriers have few players and thus high profit margins. Markets with low entry barriers have many players and thus low profit margins. Markets with high exit barriers are unstable and not self-regulated, so the profit margins fluctuate very much over time.
