Home » Eng Accounting » B » Barriers to exit

Barriers to exit

Obstacles that make it costly for a firm to exit a market. Barriers to exit intensify competition in a market because incumbent firms have little choice but to ‘stay and fight’. Examples of barriers to exit include the costs involved with the write-off of assets, redundancy payments, penalties for terminating contracts, and the loss of reputation and goodwill.

Reference: Oxford Press Dictonary of Economics, 5th edt.