Final answer:
Promotional costs can be a significant barrier to new entrants in a market, particularly when competing against well-established brands. Competition can lead to reduced profits and potential job losses for businesses that cannot keep up, but it generally benefits consumers and the nation's economy. Other barriers include costs for physical assets and regulatory limitations.
Step-by-step explanation:
The costs of promoting products can be significant and tend to represent a major barrier to new entrants in a market. In some sectors, such as the beverage industry, the advertising budgets needed to compete with established brands like Coca-Cola and Pepsi Cola are so substantial that they discourage new competitors. A strong brand identity can create a high barrier to entry that may prevent new firms from gaining a foothold in the market.
In terms of market dynamics, competition from firms offering better or cheaper products can lead to reduced profits for existing businesses, and in some cases, may force them out of the market. This scenario might result in job losses for workers employed by the displaced firms. On the other hand, consumers benefit from the increased competition, as they are likely to get more innovative or less expensive products, ultimately improving the nation's economic welfare.
Moreover, there are other kinds of barriers, from the cost of physical assets, like retail space, to regulatory limitations, such as control over available radio frequencies for broadcasting. These types of barriers can further prevent new businesses from entering particular markets.