Describe the barriers to entry for monopolistic industries.

Barriers to entry are the obstacles that new competitors might find when trying to enter an industry. These obstacles can fully restrict the entrance of new firms. A monopoly is a type of market structure in which there is only one seller in the market due to the high barriers to entry. You can find below some sources of entry barriers in a monopoly.

• Economies of scale - This barrier to entry is associated with a natural monopoly. In this situation the average cost fall with an increase in scale. Therefore, it is actually better to maintain only one firm in the market because it is more efficient.
• Capital requirements - Some industries require a very high initial investment that is almost impossible for other investors to enter the industry.
• Control of resources - There are situations in which a firm has full control of a resource that is an essential input for the production of a good or service such as minerals or oil.
• Legal restrictions - Other types of barriers to entry that lead to a monopoly are patents, copyright, and trademarks. These are legal obstacles that restrict the entrance of new competitors because it is impossible to be part of the industry for many years.
• Strategic barriers - This type of barrier is related to market power. A monopolistic firm might price the product or service so low to discourage the new entry of competitors.