Barriers to entry

Barriers to entry are the economic term describing the existence of high start-up costs or other obstacles that prevent new competitors from easily entering an industry or area of business. Barriers to entry benefit existing firms because they protect their revenues and profits.

Common barriers to entry include special tax benefits to existing firms, patents, strong brand identity or customer loyalty, and high customer switching costs. Others include the need for new firms to obtain proper licenses or regulatory clearance before operation—Read more at Investopedia. Hayes, Adam. “Barriers to Entry.” 25 June 2019.