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Essay / Research Paper Abstract
This 3-page paper discusses market equilibrium and barriers to entry that can interfere with equilibrium. Bibliography lists 2 sources.
Page Count:
3 pages (~225 words per page)
File: AS43_MTeconbarr.doc
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Unformatted sample text from the term paper:
firms in a particular market to satisfy consumer demand. If there are too few firms, the theory notes, demand goes up, as do prices. Too many firms means lowered demand,
lowered prices, and organizations going out of business. This, at least, is the theory. In reality, however, firms arent all that thrilled about
equilibrium - if it was up to them, there would be less competition and more profit-taking. This is where barriers to entry come into play.
In a market in which there is perfect competition (i.e., just enough firms to satisfy just enough demand), we dont see barriers to entry. However, in monopolies
and oligopolies, there are plenty of barriers to entry (Economics basics, 2010). For example, a monopoly is defined as a particular market structure or situation in which there is only
one producer/seller to service the target audience (Monopoly, 2010). In other words, in the case of monopoly, the firm is the industry, and entry into this particular "industry" is restricted
because of high costs or political reasons (Economics basics, 2010). A typical example of a monopoly with high barriers to entry is
the utilities industry. For example, most telephone companies in many countries throughout the 20th century enjoyed sole ownership of service because they had control over phone lines and equipment manufacturing.
In the United States, for example, it took a great deal of legal maneuvering to break apart the close to century long monopoly enjoyed by American Telephone & Telegraph (AT&T).
In the case of AT&T, firms were unable to enter to compete because of infrastructure (AT&T owned all of the local operating companies and long-distance phone lines) and benign government
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