Barriers to entry

Obstacles to new entrants that technological change can modify by lowering capital requirements or creating high barriers through network effects and economies of scale.

High obstacles such as significant economies of scale or strong brand loyalty that protect incumbent firms' market share and allow for long-run supernormal profits.

Obstacles that determine a market's position on the spectrum, being zero at the perfect competition extreme and insurmountable at the pure monopoly extreme.

Freedom of entry and exit means there are none, so short-run supernormal profits are competed away by new entrants and losses cause an exodus.

Factors such as high sunk costs, economies of scale, or strong brand loyalty that prevent new firms from easily entering the market.

A factor affecting firm behaviour and performance, alongside market concentration, government regulation, and technological change.