How do barriers to entry help monopolies maintain power?

A monopoly is a firm with a majority market share in a particular industry. Barriers to entry are things that stop potential new entrants from entering the market, thus keeping competition in monopolistic markets low and as a results allows monopolies to maintain their power.

Examples are; economies of scale - lower average cost as output rises due to bargaining power, experience etc. New entrant won't be able to charge a price as low as the monopoly. High start up costs (technology, energy) brand loyalty (coca-cola/apple) network effects (facebook)

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Answered by Navjyot D. Economics tutor

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