Free Entry Can Harm Consumers by Allowing Less Efficient Firms to Dominate Markets
The article explores whether it is better for a more efficient or less efficient company to enter a market first. By looking at how different firms' costs affect market entry, the researchers found that having a more efficient firm enter first may not always be best for overall welfare. This is because the first entrant may not try as hard to keep out competitors. These findings have important implications for how markets are structured and how public services are privatized.