Final answer:
Blocked entry in monopolies refers to any barriers preventing competitors from entering the market, which can include legal restrictions, control of technology, and economies of scale, ensuring monopolies maintain profits and market control.
Step-by-step explanation:
What is 'Blocked Entry' in Monopolies?
'Blocked entry' in a monopoly context refers to the barriers to entry that prevent or discourage potential competitors from entering a market. These barriers can be legal, technological, or market in nature.
For example, legal restrictions such as patents and copyrights can give a company exclusive rights to produce a certain product, deterring others from entering the space. Technological barriers may include control of a specific technology or production method that competitors cannot easily replicate. Market barriers often involve economies of scale, where established players can produce at a lower cost, making it difficult for new entrants to compete.
Other examples of barriers to entry include control over essential resources, or legal monopolies where competition is heavily regulated or prohibited. When such barriers are in place, they help the monopolist maintain market control and profit margins by eliminating the threat of new entrants. This characteristic of monopolies keeps markets less competitive and can result in higher prices for consumers.
Monopolies exploit these barriers to entry utilizing various strategies, ranging from aggressive legal protection of intellectual properties to strategic pricing such as predatory pricing. In certain cases, the barrier is due to natural circumstances, leading to what's known as a natural monopoly. This could happen when one firm dominates the market to a degree that offering the service or product by another firm would actually lead to inefficiencies.