Calvo's Law of Competition

Calvo's Law of Competition states that a market’s long-term competitiveness depends on the ease with which new firms can enter and compete. Essentially, when entry barriers are low—such as minimal startup costs or regulations—more firms can join the market, fostering innovation and better prices for consumers. Conversely, high barriers can lead to less competition, allowing existing firms to maintain higher prices and reduce incentives to improve. The law emphasizes that open markets with accessible entry points tend to be more dynamic and efficient, promoting healthier competition and better outcomes for consumers.