Final answer:
An American company can operate in a foreign country with ownership restrictions through a joint venture. Legal barriers to entry can be both government-enforced, such as licensing laws, or non-governmental, like trademarks. Identifying these barriers helps in understanding market accessibility and competition.
Step-by-step explanation:
Sometimes a country's laws forbid foreigners from ownership within their nation, and the only way an American company can have a presence in that foreign country is with a joint venture. A joint venture is an arrangement where two or more parties come together to undertake a specific business project. In countries with restrictions on foreign ownership, a joint venture with a local company often allows a foreign company to operate within the country in a way that complies with local laws.
Government-Enforced Barriers to Entry
- A city passes a law on how many licenses it will issue for taxicabs - government-enforced barrier.
- A city passes a law that all taxicab drivers must pass a driving safety test and have insurance - government-enforced barrier.
Barriers to Entry That Are Not Government-Enforced
- A well-known trademark - non-government-enforced barrier.
- Owning a spring that offers very pure water - non-government-enforced barrier.
- An industry where economies of scale are very large compared to the size of demand in the market - non-government-enforced barrier.
Situations That Do Not Involve a Barrier to Entry
- None of the provided examples are situations that do not involve a barrier to entry.