It usually involves some cost and effort.
for companies to start operating in a new market. The barriers that
The companies need to overcome in order to be able to operate in markets where they do not have a presence.
previously worked on are often referred to as barriers to entry. The
scholars' definition of barriers to access that many economists seem to be able to
a consensus is attributed to George Stigler (1911–1991), who is associated with
so-called Chicago School of economics and received the Nobel Prize in Economics in 1982.
Stigler's definition of barriers to entry was that they consisted of
„the production costs for companies that want to enter the market
need to outperform the companies already operating in the market.“
There are various other definitions of access barriers, for example, that
that a barrier to entry is everything that enables companies operating in a market
to have an unusually high profit from their operations without having to fear that new
a company enters the market. There is also the definition that
that a barrier to entry is anything that prevents a company from entering a new market
market, when such income increases national welfare.
If there are no barriers to entry in a market, then
expecting new companies to come and start operating on it as soon as
profit opportunities arise on it. This has the consequence that such a market
can be more efficient than markets with barriers to entry. Various
The types of barriers to entry are a feature of various markets and a considerable amount of time
Competition authorities around the world are trying to reduce, or remove, them.
access restrictions that are in place to increase their efficiency.
Competition authorities around the world generally look at three
types of access barriers in their research, which are often divided into
the following categories according to their nature:
Natural access barriers include, for example, a sinkhole.
cost. Sunk cost is considered to be a cost that cannot be
to recover if a company that has commenced business decides to cease trading.
In industries where there are significant economies of scale, that
The mere fact of which constitutes a barrier to entry, as companies then need them in
in most cases, to reach a certain minimum size in order to be able to produce
the relevant product in a cost-effective manner.
Laws and regulations can, in many cases, contribute to
positive externalities, e.g. environmental protection or conservation
financial stability, but can also involve certain barriers to entry. As
For example, in many cases, companies need to have certain licences to
in order to be able to carry out its activities. If the number of licences is limited and
It can be difficult for businesses that are not traded on a free market.
A new company entering the market.
Finally, the behaviour of companies operating in the market can have an effect.
as a barrier to entry. They can make the entry of new players unattractive by
for example, investing in excess capacity. They can in some cases also arrange it so that
about the knots so that it will not be attractive for their customers to move
their business differently. An example of this is the use of so-called loyalty discounts.
When handling cases at the Competition Authority, consideration is always given
what access barriers exist in the existing market
to review each time and try to assess whether it is possible to reduce, or remove
these barriers to access. When barriers to access stem from laws, regulations or
The institution can take action in respect of the measures of public authorities, for example by issuing
deems that the obstacles will be reduced, e.g. by changing the law. When
The barriers, however, stem from the behaviour of dominant firms operating in the market.
in the market, the institution can investigate the matter further and take action when
It is needed.
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