When a firm obtains market power through barriers to entry created not by the firm,but by the government,it is referred to as ________.
A) legal market power
B) regulated market power
C) natural market power
D) differentiated market power

Question

Quizplus · Accepted Answer

Legal market power refers to the ability of a firm to obtain a position of market power through legal means, such as obtaining government licenses, patents, or copyrights, or by successfully lobbying for regulations that create barriers to entry for potential competitors. In this scenario, the barriers to entry are created by the government rather than the firm itself, giving the firm legal market power. Regulated market power would refer to market power granted to a firm by a regulatory agency, which is not the case here. Natural market power refers to a situation in which a firm obtains market power due to its inherent advantages, such as economies of scale or control over scarce resources. Differentiated market power refers to market power obtained by offering a unique product or service that is not easily replicated by competitors.

When a Firm Obtains Market Power Through Barriers to Entry