Free Entry

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Free Entry

A situation in which there are no barriers to entry. That is, any seller wishing to bring a product to market may do so with little or no trouble. While free entry is rare in practice, a market is more efficient if there are few barriers to entry because it leaves open the possibility that new competition with lower prices or better products may arrive at any time.
References in periodicals archive ?
(5) Hence the free entry condition can be described as follows:
If there is no financial friction, the free entry condition (3.8) must hold in the steady state equilibrium.
However when there is financial friction, free entry condition may not hold in the steady state equilibrium.
If [eta] [greater than or equal to] 1, there is no contradiction between (3.8) and (3.10), and therefore free entry condition will hold with equality in the equilibrium.
This implies that free entry condition (3.8) holds with equality regardless of the value for [eta].
The free entry condition links the price of equity (the value of products) with marginal cost and markups, and hence with inflation dynamics.