Economies of scale means that your costs decrease as the scale of your operations increase. It prevents the entry of new firms. When economies of scale exist, the firm’s average total cost declines as the firm increases its size of operation. With the example of Air Canada, as the average total cost decreases its size of operation increases. In 2007, 33+ million passenger travel through Air Canada now its increased to 41.1 million of passenger. Governments can limit or prevent entry to industries with various controls for example, licensing requirements, limits to access to raw materials, patents, government franchise and brand name recognition. For example, Requirements in the Transportation Act that domestic carriers, including new entrants,