1. What is market structure?
Market structure is the organisational and other characteristics of a market
We tend to focus on those characteristics of a market which affect the degree of competition between firms and their pricing decisions (their behaviour)
Traditionally we emphasise:
The existence or absence of barriers to entry and exit
The number and size distribution of buyers and sellers

2. What Barriers to entry exist to firms entering and leaving markets?
By the end of this lesson you should be able to
define barriers to entry
identify different examples in different industrial contexts
discuss the significance of barriers to entry and exit to firms in different market structures
Evaluate why barriers to entry are a critical element of market structure

3. What might make it difficult for anyone to…
Offer a Babysitting service?
Set up a school?
Open a new coffee shop in Dorking?
Establish a new Hairdressing salon?
Start a steel company?
Deliver gas to households in North Holmwood?
Work through the first example on the board using a mind map, then let the students work through the remainder of the examples.
Write a sentence to describe what you would understand by the term Barriers to Entry. Use different students to build up a good definition, then give them an official one.

4. Barriers to Entry From the exercise you have just done…
If someone asked you to explain barriers to entry in plain English what could you say?

5. Barriers to Entry “marketplace”
Each of you has a barrier to entry
This is the basis of your ‘market stall’
Summarise the barrier to entry in pictures on A3 paper
You have to be able to explain to your colleagues without referring to the notes
By the end each of you should have a summary of each major barrier to entry
Barrier Card
A3 paper
Pens
Notes worksheet

6. Example: Capital Costs

7. Types of Barrier High capital costs Advertising and global branding
Large economies of scale
High costs of research and development
Patents and other legal barriers
High ‘sunk costs’
Limit pricing

8. Barriers to Entry
These barriers to entry may be divided into two groups
Some barriers occur inevitably: Innocent entry barriers
Others are deliberately created by the firm to keep out competitors

9. Barriers to Entry
A barrier to entry is anything that prevents or restricts the entry of firms to an industry
They restrict competition
They seek to protect the power of existing firms in the market

10. Using the articles, identify the potential barriers to entry.
If you were trying to get into the industry what would you find difficult?
If you were already successful in the industry, how might you respond?
So you can see how the potential barriers to entry affect the behaviour of companies inside and outside the industry.

11. Compare and contrast the barriers to entry to the UK food industry, the international oil industry and the UK banking industry
Alike 1 2 3 4
Identify barriers to entry. Establish how many we can find
Different 1 2 3 4
Different 1 2 3 4
Different 1 2 3 4

12. What would you do about them?
Discuss the significance of barriers to entry and exit to firms in different market structures
Technology company already in the industry
Technology company entering the industry
What are the barriers?
Why are they there?
Should they be there?
What would you do about them?
Split class into 3 groups with 10 mins preparation time: what are the barriers to entry? Why are they there? Should they be there? What are you planning to do about them? Do you care?
Customer of the industry

13. Homework Read Anderton pp318-320
Research (beyond Anderton!) and make a page of notes on
Barriers to Exit:
Definition
At least 3 examples of barriers to exit
What are the potential effects of barriers to exit?

14. Barriers to Entry define barriers to entry
identify different examples in different industrial contexts
discuss the significance of barriers to entry and exit to firms in different market structures
Evaluate why barriers to entry are a critical element of market structure
Homework: investigate barriers to exit
Link to next time: market concentration