Discuss the major barriers to entry of new firms into an industry and Essay

Discuss the major barriers to entry of new slosheds into an industry and how these barriers can either give organise to or maintain a monopoly company - Essay ExampleSuch cockeyeds face little or, in some cases, no competition at all.Each firm in perfect competition is a footing taker. This means that changes in output by one firm do not careen the industry supply curve sufficiently to alter the price. If the whole industry makes more or little output, the supply will shift and the price will change but not if one firm increases or decreases output, this means each firm can sell all it wants at the given grocery store price. This also indicates that marginal revenue equals price. Since each unit is sold for the same price in much(prenominal) a market structure, marginal revenue also tends to stay constant thitherfore giving us a straight horizontal line.However, a monopolizer faces a downward sloping demand and is equal to set either the price or the output, but not both. A profit maximizing monopolist would choose the output where marginal cost equals marginal revenue. This output will be somewhere everywhere the price range where demand is pricing elastic and will be sold at the price consumers will pay. In most instances, the total revenue for such firms are higher than the cost wherefore enabling monopolies to earn abnormal profits in the short run as well as the long run. In order for a firm to maintain its monopoly power and abnormal profits there must be barriers to the entry of new firms. parapets to entry are specifically designed to prevent potence firms from entering into a market. They provide firms a degree of market power without losing their existing market share. Barrier to entry anything that allows incumbent firms to earn supernormal profits without threat of entry (Boyes and Melvin, 220-222). The barriers that can be employ to create or maintain a monopoly includeThe high fixed cost or apparatus cost can be the toughest obstacle to tackle. The barrier here is access to capital. Only large firm will be able to fund the necessary investment. An established monopoly is likely to have developed change