How come the number of participants doesn’t affect the pricing competitveness in an industry? Is it because there are too many particpants and no one has an influence in pricing structure?
I think it is because if the barriers to entry are low, current industry participants strive to be competitive despite low competition because new firms can come in very easily and take any excess profit.
But there’s high competition, no?
you don’t need a lot of companies to have competitive prices because as soon as profit margins are more than they should be low barrier of entry will make companies enter the industry lowering prices so the mechanism is there without the large no. of companies