Final answer:
Licensing allows a firm to provide its technology for a fee, which is not directly related to import or export restrictions. Barriers to entry can be government-enforced, such as licensing requirements, or non-governmental, such as ownership of unique resources or brand recognition.
Step-by-step explanation:
According to the text, licensing allows a firm to provide its technology for a fee. This concept is a business arrangement where one company allows another to use its brand, patented technology, or ability to produce and sell its products. While licensing can result in fees that may circumvent some government restrictions, it is not directly related to being allowed to import or export without being subject to government restrictions. Instead, the primary benefit of licensing is that it helps a firm generate revenue from its intellectual property.
In analyzing barriers to entry, some scenarios involve government actions while others do not. For example, government-enforced barriers to entry include:
- a city passing a law on how many taxi licenses it will issue (government-enforced barrier)
- a city requiring taxicab drivers to pass a driving safety test and have insurance (government-enforced barrier)
On the other hand:
- A well-known trademark (non-governmental barrier)
- Owning a spring with very pure water (non-governmental barrier)
- An industry where economies of scale are very large compared to the size of demand in the market (non-governmental barrier).
These distinctions are essential to understand how firms encounter different types of competition and regulatory challenges in the marketplace.