In a perfectly competitive industry, any restrictions that prevent new firms from entering

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In a perfectly competitive industry, restrictions that prevent new firms from entering hinder economic efficiency. Perfect competition is characterized by ease of entry and exit, and the presence of barriers to entry prevents the market from functioning efficiently. If new firms are not able to enter, incumbents are shielded from competition and may have less incentive to reduce costs or innovate, leading to inefficiencies in the market. Thus, any restrictions on entry reduce the economic efficiency of the industry.

In a Perfectly Competitive Industry, Any Restrictions That Prevent New