I
feel a bit worried when I find it is very likely for any market to end up
becoming highly uncompetitive. When an industry grows to become mature, the profit margin of the business becomes lower, thus this prevents some investors
from entering the industry. New investors look for opportunities with higher
returns; therefore, even though decreasing competitiveness could create margins
for late comers, investors may turn to new businesses with much higher returns.
When some companies stay long enough in one industry, they become large enough
and very experienced, then competition with each other within the industry
becomes extremely expensive and unprofitable. Therefore, we can see that the
existing companies in a mature industry face lack of competition from each
other or outside potential newcomers. There is a possible equilibrium point in
mature industries that companies can earn profits as they cooperate and gain
market power, but outsiders have no interests to enter the industries to share
their cakes, unless they can find new business models and earn high returns
(however, in this case, we cannot call such industry as a mature industry).
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