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______ create(s) legal barriers to entry.

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BlackTom AI · Accepted Answer

Considering the question about what creates legal barriers to entry, I will evaluate each option.
Option 1: 'Firms' — While firms can influence barriers through strategic actions or by innovating, they do not inherently create legal barriers to entry. Legal barriers are established by laws, regulations, or government policy, not by private firms unilaterally. This makes this option misleading in the context of legal barriers.
Option 2: 'Government' — This choice correctly identifies the role of laws, regulations, licenses, patent systems, and regulatory standards that the government sets, which legally restrict who can enter a market. These formal rules create the legally enforceable barriers that entrants must navigate. This is the canonical source of legal barriers in most market structures.
Option 3: 'The market' — The market can create barriers through phenomena like high sunk costs, brand loyalty, or network effects, but these are typically non-legal barriers. They are economic or strategic barriers rather than legal ones, so this option does not specifically describe legal barriers.
Option 4: 'Competitors' — Competitors might respond to entry with price wars or exclusive contracts, which can deter entry, but such actions are strategic and competitive practices, not legal barriers established by law. This option conflates competitive dynamics with legal restrictions.
Overall, the statement that aligns with the concept of legal barriers to entry is that the Government establishes them through laws and regulations, while the other options refer to non-legal or indirect factors that can influence entry but do not constitute legal barriers.

Blank ______ create(s) legal barriers to entry.

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