Final answer:
The U.S. government restricts market entry primarily through licensing, where businesses require approval to operate, and regulation, which sets standards for market entry and operation. Other barriers like trademarks or economies of scale are set by the industry and not enforced by the government.
Step-by-step explanation:
Governments in the United States typically restrict entry into markets to protect consumers, ensure fair competition, and address externalities. There are two main methods employed for this purpose: licensing and regulation. Licensing involves the government granting permission to individuals or companies to operate in particular industries. This ensures that only qualified and approved businesses can provide certain services or goods, maintaining industry standards. For example, to restrict entry into the taxi market, a city may pass a law on how many licenses it will issue for taxicabs, making it a government-enforced barrier to entry.
Regulation, on the other hand, includes laws and rules that set standards for market entry and operation. For instance, requiring all taxicab drivers to pass a driving safety test and have insurance is another government-imposed regulation to ensure public safety, which can also act as a barrier to entry.Other forms of barriers to entry include natural monopolies or barriers created by companies themselves, such as a well-known trademark or industries where economies of scale are large compared to the demand in the market; these are not government-enforced barriers. Conversely, owning a spring with very pure water is a resource-based advantage but does not involve a government-enforced barrier to entry.