Barriers to entry are important in the creation of monopolies because they keep competitors out of the industry. Although many types of barriers exist, historically, ownership of an essential resource, government patents and licenses, and large entry costs have served as the primary barriers to entry. For each of the following cases, indicate which type of barrier created the monopoly.
a. In the 1940s, Aluminum Company of America owns all of the world’s known bauxite deposits.
b. The local cable TV company has the only government issued license to supply services in the area.
c. The pharmaceutical company, MAXCO, invented and patended a new baldness drug.
d. In the 1950s, AT&T provided long-distance telephone service by stringing millions of miles of copper wiring across the United States.