Econ 3.3.3 - Concentrated Markets

Barriers to entry are the ❌ that prevent other firms from ❌ and entering the industry. They protect ❌, maintain ❌ and ensure SNPs. There are three main types of barriers, which are:

• Legal Barriers aka ❌
This can include ❌ such as:
❌ – the right to be the sale provided for up to 25 years for new products and processes
❌ – this is on literacy words – 70 years after death
❌ – slogans, logos, fonts
It can also include Government Licence
The government provides a certain company/organisation the right to be the sole provider of something e.g. UCAS

• Structural Barriers aka ❌
These are barriers simply due to the structure of the industry not due to any attempt e.g.
High Sunk Costs which is a clear ❌ making it harder to compete. This increases the minimum efficient scale which makes it very hard for small firms to compete.
EOS at high level of output as obtain significant EOS potential makes it harder for small firms to compete
Natural Monopolies which means that it is not ❌ to have many competing firms in some industries
Access to ❌ e.g. oil or climatic conditions

• Strategic Barriers
These are ❌ barriers to entry
USP
Using profits to sustain ❌ to stay ahead of the competition
❌ which involve selling products at a loss when threatened by ❌ in order to force them out of the industry and then raise prices later. This is illegal however it is hard to catch.
❌ and ❌ Marketing
Takeovers
Brand ❌

Price discrimination is done by firms in order to make more ❌ and more ❌. It allows them to exploit the higher ❌ to pay as well as ❌ demand and higher revenue during ❌ times where they would otherwise see none/little demand. Furthermore it allows them to offload ❌.

Firms can face difficulties when colluding this is because ❌ predicts someone will cheat. Furthermore ❌ is illegal, ❌ can occur and new firms can still enter the market.

Firms can be anti-competitive through:
1. ❌
This is an agreement on set prices which is illegal and if a firm is caught and found guilty it can be fined 10% of all revenue over a 3 year period. Manufacturers are allowed to have a ‘RRP’ but they cannot insist that this is the price the firm sell for.

2. ❌ to sell to certain retailers.
A manufacturer can’t ensure retailers will sell at the right price then they can choose not to sell to specific retailers that would ❌ but sell off cheaply e.g. high-end perfume sold only to Selfridges rather than Boots.

3. ❌
This is when an existing firm ❌ lowers prices often ❌ and often occurs when they are ❌ by a ❌. The existing firm can afford to lose money for longer and will raise prices again once the other firm has been forced out of the market and this is ❌.

4. ❌ pricing policies
Giving bulk buying/regular trade discounts is good business sense, but it makes it harder for small firms to compete. This is why individual grocers/bakers cannot survive easily against supermarkets like Tesco.

5. Tying in related goods and services
When firms only sell a product if consumers also pay for ❌ products e.g. only buy a game console if games are bought as well, insurance packages.

6. Refusing the competition ❌ to or use of essential facilities
Walls and Coke provided fridge and freezers free of charge to small retailers on the condition that they sell their products. Some airports have agreements with some airlines allowing them only access to land on that airport.