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Joanne, Tutor
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Experience:  BSc (Hons) Political Science
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In economics, what does non-price barrier to entry mean

Customer Question

In economics, what does non-price barrier to entry mean?
Submitted: 6 years ago.
Category: Homework
Expert:  Joanne replied 6 years ago.
hi, are you talking about non-tariff barriers in trade or barriers to entry in market structures? also please advise word requirements
Customer: replied 6 years ago.
Barriers to entry in a market structure. I wanted to know what the non price barriers to entry would be for a grocery store who specializes in high-end organic products. Like how could they deter new stores entering the market from competing with them?
Expert:  Joanne replied 6 years ago.
okay, in economics, barriers to entry prevents or makes it difficult for new firms to join the industry.

In the case of the grocery store, non-price barriers which it can use include branding where building up a strong brand will help to maintain market power and new firms will find it hard to attract customers. The store can also use techniques like offering loyalty cards which will promote customer loyalty and thus make it difficult for new firms to appeal to consumers as well. Another form of non-price barrier will be the use of patents/trademarks to prevent new firms from selling the same goods and this can help to deter new stores from entering the market.

Customer: replied 6 years ago.
How could a patent or trademark work for a specialty grocery store?
Expert:  Joanne replied 6 years ago.
For example, we can take a look at Marks and Spencers which introduces their own line of food products. They can patent their food products to prevent other similar companies from selling same kind of goods. In addition, by labelling their goods with their brand, consumers may associate the goods to be of higher quality and thus be more inclined to purchase them. This will maintain the company's market share and keep out new entrants. This can be applied to the organic grocery store in your scenerio, where it can also introduce its own food products under its own label.
Customer: replied 6 years ago.
Thank you! Also, I'm a little confused how advertising can be a non-priced barrier? Your help is greatly appreciated!!!
Expert:  Joanne replied 6 years ago.
For example, a giant like McDonalds have the ability and funds to invest in huge advertising campaigns to bring attention to their products and attract consumer's attention. This will likewise help to maintain the company's market share and keep out new entrants for new firms tend to have less funds and are less able to reach out to the consumers like these established companies. As such, the gorcery store can also exploit its economies of scale and engage in extensive advertising to make their products like price elastic and also to matintain a stronghold on their market share.
Customer: replied 6 years ago.
One more question! Do you know where I can find a definition of non-price barriers to entry? I can only find barriers to entry but not specifically non-price?
Expert:  Joanne replied 6 years ago.
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