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In [[economics]], a '''barrier to entry''' is an obstacle to a firm entering a [[market]]. Almost all markets have some barriers to entry, as entering a market will usually involve raising [[capital]] to purchase [[factors of production]], and advertising to help establish a customer base. However, this will vary considerably between different markets. For example, launching a new mass market car is likely to be much more costly than opening a new shop, as the former will require a large amount of research and development, as well as the cost of setting up a production line, and the necessary advertising.     

In [[economics]], a '''barrier to entry''' is an obstacle to a firm entering a [[market]]. Barriers to entry may be divided into natural and artificial ones. A government monopoly that excludes private competition in a market is generally considered the highest such barrier (see also [[black market]]).

 

Almost all markets have some barriers to entry, as entering a market will usually involve raising [[capital]] to purchase [[factors of production]], and advertising to help establish a customer base. However, this will vary considerably between different markets. For example, launching a new mass market car is likely to be much more costly than opening a new shop, as the former will require a large amount of research and development, as well as the cost of setting up a production line, and the necessary advertising.     

Generally, barriers to entry put new entrants to a market at a disadvantage, compared to established firms. The new entrant to the market may have to invest a large amount of money before it begins to earn a [[profit]]. It may be doubtful if this can be recouped.  

Generally, barriers to entry put new entrants to a market at a disadvantage, compared to established firms. The new entrant to the market may have to invest a large amount of money before it begins to earn a [[profit]]. It may be doubtful if this can be recouped.