sanctioned monopoly on the delivery of first-class mail. In other cases the
regulation and/or licensing of firms severely restricts entry. Professional
organizations for dentists or engineers, for example, often restrict the
number of places in accredited dental or engineering schools and thus
restrict entry into those industries.
The six large Canadian banks have extensive country-wide networks of
retail branches. In order to compete effectively in this market, any new
entrant would need to build a similar network, at enormous cost. The
established network of retail branches is therefore an effective entry
barrier.
Radharc Images/Alamy Stock Photo
Other entry barriers can be created by the firm or firms already in the
market. In extreme cases, the threat of force or sabotage can deter entry.
The most obvious entry barriers of this type are encountered in organized
crime, where operation outside the law makes available an array of illegal
but potent barriers to new entrants. But law-abiding firms must use legal
tactics in an attempt to increase a new entrant’s costs and thereby deter
their entry. Such tactics range from the threat of price cutting—designed