Free Entry

Free entry is a term used by economists to describe a condition in which firms can freely enter the market for an economic good by establishing production and beginning to sell the product.

Free entry is implied by the perfect competition condition that there is an unlimited number of buyers and sellers in a market. In comparison to perfect competition, however, free entry is a condition often more applicable to real world conditions. To see this, suppose there is a good which not many people want, which is produced by only one firm. In this situation, there is not perfect competition. However, if there is free entry, the market is likely to be more efficient than if there is not. If the monopoly firm raises its prices too high, another firm could enter the market and take its customers. According to this reasoning, where there is free entry the economic damage caused by monopoly behavior may be mitigated.

Read more about Free EntryBarriers To Entry

Other articles related to "free entry, free, entry":

Perfect Competition - Approaches and Conditions
... Finally, the idea of free entry with free access to technology is also often listed as a characteristic of perfectly competitive markets, probably owing to a ... In recent decades it has been rediscovered that free entry can be a foundation of absence of market power, alternative to negligibility of agents ... Free entry also makes it easier to justify the absence of collusion any collusion by existing firms can be undermined by entry of new firms ...
Free Entry - Barriers To Entry
... Numerous barriers to entry could exist that restrict free entry A resource is owned by a single firm ...
Washington Capitals - History - Alexander Ovechkin Era (2004 - Present)
... In the 2004 NHL Entry Draft, the Capitals won the Draft Lottery, moving ahead of the Pittsburgh Penguins who had the NHL's worst record, and selected Alexander Ovechkin first overall ... Swedish phenom Nicklas Backstrom, the fourth overall pick in the 2006 NHL Entry Draft, to three-year entry-level contract ... They also signed 19-year-old Semyon Varlamov to a three-year entry-level contract ...
Atomistic Market - Approaches and Conditions
... Finally, the idea of free entry with free access to technology is also often listed as a characteristic of perfectly competitive markets, probably owing to a difficulty with abandoning completely the older ... In recent decades it has been rediscovered that free entry can be a foundation of absence of market power, alternative to negligibility of agents ... Free entry also makes it easier to justify the absence of collusion any collusion by existing firms can be undermined by entry of new firms ...

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