Why would economies of scale be a barrier to entry?
1 Answer
Jul 3, 2015
economies of scale is experienced when the firm's production cost is low due to size or output.
Explanation:
e.g a telephone company having cable lines running throughout the country would have an advantage of low costs when processing their daily business whereas a new entry company would experience very high costs when processing a phone call between one person and the other, in different towns. the cost of daily processing would be a barrier to entry or discourage new competition in the industry or country/economy.
