TSR Wiki > Study Help > Subjects and Revision > Revision Notes > Economics > Barriers to entry
Barriers to entry are artificial barriers that deter potential new firms from entering the market.
The types of barriers to entry are:
- Capital costs - high fixed costs of an industry
- Economies of scale - existing firms can produce at lower costs than new firms
- Natural advantages of location and access to raw materials (e.g. Tesco's land bank or DeBeers' diamond mines)
- Legal advantages - patents, intellectual property, copyright.
- Marketing barriers - brand image
- Sunk costs - costs that cannot be recovered when the business folds (e.g. advertising costs)
- Unfair trade practices - such as bundling or buying up competitors.
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