1. Starter – or pre lesson task
Investigate examples of barriers to entry

2. Lesson Objectives
All students will consider the effect of the degree of competition on market price and output
Most students will be able to understand the implications of barriers to entry and contestability to levels of competition
Few students will understand the role of the government in breaking down barriers to entry in some markets.

3. The spectrum of competition - recap
Monopoly
Single producer in market
Perfect Competition
No producer has market power
Imperfect Competition
Strong competition but producers
still have an element of market power

4. Competitive markets and easy entry
Markets are most competitive when new businesses can easily join in
Costs of starting business are low and no restrictions on entry
High profits in market would quickly attract new entrants and profits would be competed down to minimum to stay in business
Normal profit just significant to keep producer in the market. If profits fall below this level, costs to produce and sell product won’t be covered

5. Contestability
The ease with which firms can enter and leave the market

6. Task
Discussion point pg7

7. Barriers to entry Sunk costs Legal barriers
Scale of existing firms (economies of scale)
Branding of existing firms
Intellectual property rights
Required levels of R&D
Required levels of capital
Predatory pricing rom existing rivals

8. task
Show your understanding pg8

9. HWK
Oligopoly is next – examples – pros and cons for our economy of oligopoly – think winners and losers