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| '''Potential competition''', a fundamental conception in ], refers to the possibility of new entrants into a given market. The opposite is a ] which is a situation where competition is against the law. | '''Potential competition''', a fundamental conception in ], refers to the possibility of new entrants into a given market. The opposite is a ] which is a situation where competition is against the law. | ||
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Potential competition, a fundamental conception in microeconomics, refers to the possibility of new entrants into a given market. The opposite is a legal monopoly which is a situation where competition is against the law.
The market in question can be defined in both product and geographic terms, or both. See market definition, i.e. it can refer to the market for sneakers in New York City.
Potential competition might be represented for that particular market by local shoe manufacturers, who could without prohibitive expense re-tool their machinery to make sneakers. Or it could refer to the sneaker manufacturers of northern New Jersey, who could move their product across the Hudson River if profits there proved enticing.
The fact that there is the potential for competition pressures defacto monopolies to keep prices low.
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