Final answer:
Legal (government-imposed) barriers to entry are restrictions enforced by the government, such as licensing requirements and trademark protections, which can prevent or discourage new competitors from entering a market. These barriers can shape the competitive dynamics within an industry.
Step-by-step explanation:
Legal (Government Imposed) Barriers to Entry
Legal barriers to entry are market entry obstacles enforced by the government that can limit the ability of potential competitors to enter into an industry. Government-imposed barriers to entry often include measures like licensing requirements, safety regulations, and protection of intellectual property.
a. When a city passes a law on how many licenses it will issue for taxicabs, this is a direct government-enforced barrier to entry as it restricts the number of operators in the market.
b. A city passing a law that requires all taxicab drivers to pass a driving safety test and have insurance might seem like a legal barrier, but if most people can meet these criteria, it may not significantly prevent entry into the market.
c. The enforcement of trademarks by the government serves as a legal barrier to entry because it prevents new entrants from using established brand names, logos, or other trademarked elements to compete in the market.
Therefore, such regulations can affect the competitive landscape of a market by making it more difficult or costly for new firms to enter and compete.