Question

What are some of the specific factors that would cause companies to want to enter a industry?

Answer 1

The threat to new entrants or new companies that want to enter an industry would create competition for the existing firms in the industry. One obvious factor which induces new firms to enter a market is profitability in the existing market. It also requires that the barriers to entry are low which are as follows; Economies of scale which is a pivotal characteristic of natural monopoly, product differentiation, capital requirement, expanding capacity and government policies which facilitate some firm over others would restrain other firms from entering the market.