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Classify the following as a government-enforced barrier to entry; a barrier to entry that is not...

Classify the following as a government-enforced barrier to entry; a barrier to entry that is not government-enforced; or a situation that does not create a barrier to entry

  1. A city passes a law on how many licenses it will issue for taxicabs
  2. A city passes a law that all taxicab drivers must pass a driving safety test and have insurance
  3. A well-known trademark
  4. Owning a spring that offers very pure water
  5. An industry where economies of scale are very large compared to the size of demand in the market
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Answer #1

A. Government Enforces barriers: When the city passes any law that hinder the entry or exit in the industry it is termed as Government Enforces barriers. Following fall in this category:

  1. A city passes a law on how many licenses it will issue for taxicabs
  2. A city passes a law that all taxicab drivers must pass a driving safety test and have insurance
  3. A well-known trademark

B. situation that does not create a barrier to entry is: Owning a spring that offers very pure water. It is because anyone can own such spring.

C. A barrier to entry that is not government-enforced is: Owning a spring that offers very pure water. It is because the barrier is create due to economies of scale and large firm size.

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