Which of the following costs may provide barriers to entry in a market?
A) High research and development expenditures
B) License fees
C) Sunk costs associated with specialized facilities
D) all of the above

Question

Quizplus · Accepted Answer

All three options - high research and development expenditures, license fees, and sunk costs associated with specialized facilities - may provide barriers to entry in a market. High research and development expenditures may be necessary to develop new products or technologies, but new firms may not have the resources to match the expenditures of established firms. License fees may create a financial burden for new firms attempting to enter a market. Sunk costs associated with specialized facilities may deter new entrants because the costs of entering the market are too high to justify potential profits.

Which of the Following Costs May Provide Barriers to Entry