Barriers to Entry and Cartel Sustainability

Analyzing Market Entry Challenges

Comparing Market Entry Obstacles

A new ride-sharing company wants to enter a major city's market, which is currently dominated by a single, well-established firm. The existing firm has a massive network of drivers and users, meaning that any new rider can quickly find a car, and any new driver has a high probability of getting a fare. This makes it difficult for the new company to attract either drivers or riders, as its smaller network is less valuable to both groups. Which of the following best describes this specific type of barrier to entry?

Match each market scenario with the primary type of barrier to entry it illustrates.

Analyzing Policy Effects on Market Entry

In an industry where established firms benefit from significant economies of scale, a new, smaller entrant can typically compete effectively on price from its first day of operation.

Evaluating Barriers in the Pharmaceutical Industry

Evaluating Strategic Responses to Entry Barriers

A new solar panel technology is developed that is twice as efficient as any existing product. The company that invented it secures a legal instrument from the government that grants it the exclusive right to manufacture and sell this technology for the next 20 years. This government-granted protection, which legally prevents any other firm from producing an identical solar panel, is a specific type of barrier to entry known as a(n) ____.

A new company plans to enter the market for a specific type of consumer electronic device. The market is currently dominated by a single, large firm that produces its devices at a massive scale, resulting in a significantly lower cost per unit than a new, smaller-scale entrant could possibly achieve. Which of the following statements best judges the nature of this challenge for the new company?

Identifying Market Entry Barriers

Match each scenario with the primary type of barrier to entry it represents.

Comparing Market Entry Obstacles

A government's decision to require a substantial, non-refundable licensing fee for any new company wishing to operate in the national telecommunications market effectively lowers barriers to entry by creating a clear, standardized process for all potential competitors.

A new startup aims to enter the high-performance electric vehicle market, which is currently dominated by a few large, established manufacturers. Based on the typical challenges in such an industry, arrange the following barriers to entry in order from the most difficult for the startup to overcome to the least difficult.

Distinguishing Business Costs from Entry Barriers

A new pharmaceutical company is attempting to enter the market for a specific type of medication. Below are four challenges the company faces. Arrange these challenges in order from the most significant barrier to entry to the least significant.

A pharmaceutical company develops a new, life-saving drug and secures exclusive rights from the government to produce and sell it for 20 years. This legal protection, which prevents other companies from manufacturing the same drug, is a form of intellectual property right known as a ______.

Evaluating the Societal Impact of Patent Protection

Analyzing Policy Effectiveness on Market Entry

Patents and Intellectual Property as a Source of Monopoly