Analyse how barrier to entry determine the degree of competition in the British transport market.

A barrier to entry is any complication or expense a firm might encounter when entering the transport market. There are many barriers to entry such as economies of scale being exploited by pre-existing firms; high fixed costs which are common in the transport market as laying railway and the real-estate associated with that is costly; control of key infrastructure such as TFL's ownership of the underground or vertical integration within the market.The transport industry has extremely high barrier to entry, particularly in the form of initial set up costs. In order to enter the transport market and compete with TFL, costs could include anything from building tunnels, laying track and buying trains and buses; requiring immense funds and confidence from investors or banks. These high costs mean that at the same output (Q1) the Natural Monopoly's (TFL) costs would be at C2, significantly lower than C1 due to economies of scale. This means that were would be no competition in the transport market as a result of these high barriers to entry.Barriers to entry when entering the transport market would not simply be financial. Another barrier to entry could be the legal battle to win planning permission to build new underground tunnels as the potential for disruption, noise pollution and accidents would make this nearly impossible to secure. Therefore, there would be no competition in the British transport market as no other firm would be able to enter and this illustrates how high barriers to entry determine the degree of competition in a market such as transport where a natural monopoly exists.