In a monopoly as in a perfectly competitive industry, positive profits and losses are signals for resources to flow into, and out of, respectively, the industry. A monopoly making losses in the LR will not continue producing. If the monopoly is making positive profits in the SR however, new firms will want to enter the market. In monopoly markets there are impediments that prevent new firms from entering the market. If monopoly profits are to persist in the long run, the entry of new firms must be prevented by effective entry barriers.
Economies of scale are the most common natural barrier to entry.
Set-up costs are another natural barrier to entry. The LR adjust process that drives profits to zero in the LR does not operate in monopoly markets. In the VLR technology changes. Innovation can break-down barriers to entry in monopoly markets. Economist Joseph Schumpeter argued that barriers to entry were not a problem in the VLR in fact he argues that they provided an incentive for entrepreneurs to take risks associated with invention and innovation.