Market sizes sometimes shrink following increased competition
the verdict
SUPPORTED
the evidence backs this
confidence 79/100
Empirical evidence from business demography and market shock studies shows that heightened competition can drive weaker firms out of business, sometimes leading to an overall contraction in the number of active competitors or total market size.
Evidence for · 3
Were small businesses more likely to permanently close in the pandemic?
2023 · cited by 4
Paper [1] demonstrates that intense adverse shocks and competitive pressures can disproportionately eliminate smaller firms, concentrating market share and reducing the number of operating businesses.
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More for · 2
Were Small Businesses More Likely to Permanently Close in the Pandemic?
2022 · cited by 0
Paper [4] similarly notes that high closure rates among vulnerable small businesses led to concentrated market structures with fewer active market participants.
Indian telecoms market faces massive shakeout
2016 · cited by 0
Paper [11] describes how new market entry and intense competition in the Indian telecoms market triggered a massive shakeout, squeezing margins and reducing the number of viable incumbents.