Why is the transition from monopoly to competition in local exchange markets so darn difficult? I posed that question to my economist and his response was "because the integer part of the square root of market size divided by the sunk costs of entry is small." Of course, my next question was "what?" After a lengthy adventure into the realm of the economist, this was my "takeaway."
First-and most important-competition will not take hold in any industry unless new and innovative firms enter the market. And this critical decision to enter the market depends not only on the growth
and profit potential a market holds, but also on the nature and manner
costs an entrant must spend to enter the market.
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