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exit costs

Mmsk298y ago
Hello Sir! How is exit cost a barrier to entry? Thank you.
kengarrettkengarrettTutor8y ago#1
Entry always poses a risk that the entry attempt will not be successful. If there are exit costs then the entry risk is increased. For example, let's say your company was thinking of expanding into an overseas country. However, the employment law there said that no-one could only be made redundant if they received a payment of $1m. The $1m is an exit cost, but it will also be a serious barrier to entry.
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