Answer to Question #320163 in Microeconomics for Lweli

Question

The concept of entry barriers was pioneered by Bain in 1956. He defined a barrier to

entry as anything which places potential entrants at a competitive disadvantage

compared with established firms, so that established firms are able to earn abnormal

profits over the long run.

Pick any TWO (2) of Bain’s entry barriers and discuss how each applies to any South

African industry of choice.

Answer 1

Answer.

Some of the barriers to South Africa economy according to Bain include the following :

- Expertise and knowledge where in instances which have already established technical giants through the many years they might have been in the field renders it difficult to other firms to catch up with them.

-Legal requirements is another barrier which can provide monopoly because other firms cannot use the requirements in south Africa like in the pharmaceutical company where a drug that has been sold for seven years would be difficult for another firm to sell the similar products.