Barriers to Entry in Market Economics

These flashcards cover essential vocabulary related to barriers to entry in market economics, strategies for maintaining market dominance, and the implications for competition.

Barriers to entry

Obstacles that make it difficult for new suppliers to enter the market.

Demand side strategies

Tactics used to secure customer loyalty and lock-in.

Switching costs

Impediments that make it costly or difficult for customers to switch suppliers.

Network effects

A situation where a product becomes more valuable as more people use it.

Unique cost advantages

Cost efficiencies that established companies can leverage to maintain market dominance.

Learning by doing

Efficiency gains that come from accumulated experience in production.

Regulatory barriers

Government policies and regulations that restrict market entry.

Deterrence strategies

Actions taken to discourage potential competitors from entering the market.

Customer lock-in

Strategies employed to make it difficult for customers to switch to competitors.

Economic profit

Profit earned when revenues exceed total costs, including opportunity costs.

Excess capacity

Producing more than the average demand to signal strength to competitors.

Compulsory licenses

Government-imposed requirements for businesses to operate, restricting entry.

Lobbying

Efforts to influence government policy and regulation in favor of specific interests.

Reputation and goodwill

Customer trust and loyalty built through positive interactions and brand image.

Average cost of the marginal supplier

The cost incurred by the last firm entering the market that earns zero economic profit.