Question

*Industrial economics*

Select a firm or industry (AMAZON) and use the theory of entry barriers to carry out an analysis of the strategic behaviour of that firm or industry. As part of the answer, consider the strengths and weaknesses of the theory used. ALSO, Analyse how firms in the industry (AMAZON) deter new entrants

**Outlined the theory of entry barriers and use it to analyse how firms (AMAZON) in the industry may deter new entrants**

*Word count 650, include references and citations*

Answer 1

Barriers to entry means the existence of high start-up costs or other obstacles that prevent new competitors from entering easily an industry or \business. Barriers to entry is really beneficial to the existing firms because they protect their revenues and profits. That preventing cost can be called as Limit Pricing. If we take the case of Amazon they are consider as an online business giant. They are selling their product at a very low cost to their customers.Even the others firms may not be able to sell their product at that level. So they may lose their customers and Amazon may gain new customers due to this limit pricing. If the giant firms are using this method in the near future they may get the monopoly power in that area. At that time there won't be any competitors. So that at this stage they may increase the price of their product. In Indian context Reliance Jio is getting this benefit.