The information economy has resulted in a reduction in the barriers to entry, more competitive markets and less need for government intervention Discuss. The Information Economy, Primarily Information Technology and the Telecommunications have seen a dichotomous effect in relation to barriers to entry and government intervention. In relation to specifically these two industries in Australia and abroad, the Information Technology sector is to some degree an Oligopolist market. However foremost to many, Microsoft Corporation has eclipsed the industry into a Monopoly over software in the information Technology sector. In the Telecommunications Industry in Australia, the economic sector has seen for initially the deregulation of Telstra, into two-thirds privatisation with the public float. From then the telecommunications industry in Australia has seen for less government intervention with the barriers to entry reduced and many new companies being attracted to the positive profits in this multi billion-dollar industry. Therefore this conclusion is dichotomous in nature because in the Information Technology industry there are extremely high barriers to entry and more need for government intervention. However on the other hand, the telecommunications industry in Australia has seen for a reduction in barriers to entry as a result of government deregulation and intervention. Arguably, there has been no reduction in barriers to entry in the Information Technology sector. The primary justification for this can be seen in the definition of Barriers to entry: the disadvantages that entrants face relative to incumbents (Yip 1982:17). The precursor in the Information technology industry, Microsoft has been able to manipulate the market in such a way that these disadvantages far outweigh real gains or profits. To understand this from an economic perspective one must realise the explanation of costs. Fixed costs do not by…
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