barriers to entry



Economic, procedural, regulatory, or technological factors that obstruct or restrict entry of new firms into an industry or market. Such barriers may take the form of (1) clear product differentiation, necessitating heavy advertising expenditure to introduce new products, (2) economies of scale, necessitating heavy investment in large plants to achieve competitive pricing, (3) restricted access to distribution channels, (4) collusion on pricing and other restrictive trade practices (such as full-line forcing) by the producers or suppliers, (5) well established brands, or (6) fierce competition. Barriers to exit, paradoxically, also serve as barriers to entry because they make it difficult to cut one's losses and run. Also called barriers to competition, entry barriers, or market entry barriers.

Use barriers to entry in a sentence

  • I didn't realize that there were so many barriers to entry in the country and I had to wait a few hours before I could go in.

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  • Sometimes you may have to work hard to get past any barriers to entry that are keeping you from where you need to go.

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  • You will sometimes have to work your way past some barriers to entry if you really need to get where you want to go.

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Notable Quotes

  • Barriers to Entry
    "Very, very few businesses have barriers to entry. As wonderful and as complex as the products of these companies are, they are in industries that almost never have any barrier to entry -- especially since the general business plan is one of constant innovation, thereby obsolescing one's own products. Profitless prosperity: It's a state often found in technology, where these wonderfully innovative companies that make our lives so much more pleasant wind up unable to make any money."
    - Bill Fleckenstein

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