Definition of Barriers of Entry





What does the term "barriers of entry" mean? What is the definition of the term "barriers of entry"?

Barriers of entry are the conditions or obstacles that companies must face and overcome when they want to enter a market.

If a market is hard to enter, then it is said that there are "high barriers of entry". If a market is easy to penetrate, then it is said that there are "low barriers of entry".

Definition of Barriers of Entry - Financial DictionaryLet's say that you want to start a logging company. Let's say that in addition to all of the machinery and workers that you would need to operate, you also need to obtain many different permits from various levels of government. These permits cost time and money to obtain. Let's also say that much time and energy must be spent setting up delivery of the product. This industry would have a "high barrier of entry", as it is difficult to set up a company and enter the market.

On the other hand, let's say that you want to start a blog and make some money selling advertisements. All you need is some blogging software and a domain name and you are in business - this industry would have a "low barrier of entry."




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