Barriers to entry are the existence of high startup costs or other obstacles that prevent new competitors from easily entering an industry or area of business. Barriers to entry benefit existing firms already operating in an industry because they protect an established company's revenues and profits from being whittled away by new competitors. Common barriers to entry include special tax benefits to existing firms, patents, strong brand identity or customer loyalty, and high customer switching costs.

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Some barriers to entry exist as a result of government intervention, while others occur naturally within the business world. Often, existing firms within an industry lobby for the government to erect new barriers to entry. Ostensibly, this is done to protect the integrity of the industry and prevent fly-by-night operations from setting up shop and hawking inferior products and services. In reality, firms favor barriers to entry when already comfortably ensconced in an industry to limit competition and claim a larger share of the industry's revenue. Other barriers to entry occur naturally, often evolving over time as certain industry players establish dominance.