Why would high start up costs serve as a barrier to competition?

High startup costs can serve as a barrier to competition because they create a financial hurdle that potential new entrants must overcome to enter the market. This can deter aspiring entrepreneurs and small businesses from launching their operations, leading to reduced competition. Additionally, established firms with significant resources may benefit from economies of scale, making it difficult for newcomers to compete on price and service. As a result, high startup costs can lead to market monopolies or oligopolies, ultimately limiting consumer choice and innovation.