Barriers to Entry
Plain definition
Obstacles that make it hard for new firms to enter a market — economies of scale, patents, control of key resources, high startup costs, or government licenses.
In economics
Barriers to entry are what turn temporary profits into durable ones: without them, economic profit attracts entrants until only normal profit remains. They underpin monopoly and oligopoly, and removing them (deregulation, expiring patents) is a standard pro-competition policy.
Example
Building a national mobile network requires billions in spectrum licenses and towers — a barrier that keeps the market an oligopoly of a few carriers.
Barriers to entry are confused with fixed costs. High fixed costs can be a barrier, but many barriers are legal or strategic — patents, exclusive contracts, brand loyalty — not just expensive equipment. Also, a barrier must block entrants, not merely burden incumbents.