Question

You are hired as a consultant at a price setting firm with huge profits. The firm is concerned with other businesses, what would be your plan to keep competitors out of the market?

Answer 1

To make the competitors out, barriers to entry have to be imposed.It can be done by- Patenting the product.Patent is like a license that entitles the owner to be the sole producer of the product.The firm can also establish its dominance in the market and be the first mover.All other firms will have to follow the lead of the dominant firm.The producer can also vertically integrate with the suppliers.Without the access to supply,the product can't be sold in the market.