free entry and exit

Free entry and exit refer to the idea that businesses can enter or leave a market without significant restrictions or barriers. When entry is free, new firms can start operating if they see an opportunity for profit. Similarly, exit allows firms to leave the market if they are not making enough profit or facing losses, without heavy penalties or legal hurdles. This process encourages competition, helping to keep prices fair and resources efficiently allocated. Essentially, free entry and exit promote a dynamic market environment where businesses respond flexibly to changing conditions.