In what ways is government involved with the creation of barriers to entry?

What will be an ideal response?


The government often erects barriers to entry by requiring licenses and franchises before firms can legally operate in a market, by granting patents, by assessing tariffs, or by implementing specific regulations that limit entry. It is illegal to enter many industries without a government license, and often the number of such licenses is limited. Patents create a legal monopoly for a period of 20 years, and tariffs help to keep out competition from foreign firms.