That's a good one. Although I think glossing over the fact that capital expenses are a barrier to entry regardless of what governments do or do not do is somewhat disingenuous (although unfortunately common in economics). To use his example: entering the airline business costs lots of money. You have to train pilots, buy new planes, yadda yadda yadda. Even if it there is a clear price mismatch in the cost of flying from Boston to Laguardia, I won't be able to enter that market without a huge investment and commitment to enter a lot of other markets simultaneously. Maybe I could make $100 a ticket by undercutting Big Air, but a single 747 costs $24million. So I'd need to commit to making $100 a ticket two hundred and forty thousand times just to pay off the initial capital investment in the plane.
What this means is that monopolies can and do exist in places and sectors where the government doesn't support them at all. Any time the required capital investment to enter a market is non-zero, barriers to entry exist.
-Username17