Barrier to Entry


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Barrier to Entry

A high cost or other difficulty that prevents or makes it difficult for new businesses to enter an industry. For instance, high regulation or customer loyalty may be barriers to entry for a new company. Barriers to entry provide a distinct advantage for companies already operating; these companies have high profit margins and few competitors. Examples of industries with barriers to entry are the telecommunications and energy industries, because of the high cost of infrastructure necessary to begin operations. See also: Barriers to exit.
References in periodicals archive ?
It seems clear that asymmetric information between incumbents and potential entrants applies to retail banking, but the practical importance as a barrier to entry is not known.