Section 2
Barriers to Entry: Reasons for Monopolies to Exist
Book
Version 3
By Boundless
By Boundless
Boundless Economics
Economics
by Boundless
6 concepts
![Thumbnail](../../../../../../figures.boundless-cdn.com/20299/square/brillanten.jpeg)
Resource Control
Control over a natural resource that is critical to the production of a final good is one source of monopoly power.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20272/square/gnhs1.jpeg)
Economies of Scale and Network Externalities
Economies of scale and network externalities discourage potential competitors from entering a market.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20287/square/tates-postal-service-truck.jpeg)
Government Action
There are two types of government-initiated monopoly: a government monopoly and a government-granted monopoly.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20197/raw/copyright.jpg)
Legal Barriers
The government creates legal barriers through patents, copyrights, and granting exclusive rights to companies.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20194/square/natural-monopoly.jpeg)
Natural Monopolies
Natural monopolies occur when a single firm can serve the entire market at a lower cost than a combination of two or more firms.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20269/square/diamond.jpeg)
Other Barriers to Entry
Firms gain monopolistic power as a result of markets' barriers to entry, which discourage potential competitors.