Increasing returns to scale

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Consider the market for electricity. In this industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary wiring makes it risky and most likely unprofitable for a competitor to enter the market. Which of the following best explains the barriers to entry that exist in this scenario?

Legal barriers

Exclusive ownership of a necessary resource

Reference no: EM131009710

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