When a new company enters the market, there are situations capable of influencing the price effect and the product effect, such as shifting the market supply curve to the right, with a reduction in price and profit.
With the insertion of new companies in a market, production will increase, consequently there will be a greater supply of goods available and with that the price will also be affected, since the greater the offer, the lower the price and, consequently, the lower the profit for the companies already operating. in the sector and for new companies.
Entry barriers then constitute obstacles created on purpose or naturally by the market configuration that make it difficult for new competitors to enter so that there is a greater balance between supply and demand.
Therefore, new companies in the market contribute to shift the supply curve to the right, reducing prices and companies' profitability.
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