Examples:
- laws and regulations provide great barrier for newcomers
- brand recognition (would you better by a know cigarette brand or unknown cheapest one?)
- technical and/or financial and/or IP investment, either because the INDUSTRIAL process need costly tools (so you need to be big from the start) or because you need some really specific know-how
- ...
The only way you win is either major disruption (which is usually not possible), or having a bankroll comparable in size to the incumbent. But anyone with enough cash to enter the market is doing so for a return-on-investment, with just as much profit motive as the existing players.
I like this question because it inspires the thought of an "incrementally more ethical firm". Ethics can be roughly characterized as constraints on behavior, therefore if two firms, all else equal, differ then the ethical one is naively at a natural disadvantage, having fewer degrees-of-freedom in any situation. The classic response is that cooperation between firms is itself a powerful advantage, and that ethical behavior ought to yield advantages to cooperation that outweigh the cost of behavioral restrictions.
I believe that the equation changes when ethical behavior itself is successfully attacked and associated with weakness. What happens to a bank if everyone believes it will fail? It fails. What happens when everyone believes that morality is weakness? Morality IS weakness. At that point the reputation and cooperation effects are erased, and only the loss of freedom remains. At that point the culture shifted from the "cooperate-cooperate" Nash equilibrium to the "defect-defect" one. (Religious belief tends to unequivocally favor "cooperate-cooperate" and can therefore both resist this transition and assist in the reverse transition, which adds to religion's social utility.)
There are some more ethical companies, too. In N Out french fries are $2.30, certainly due to the fact that they own their supply chain and cut potatoes in house.
If you can finangle a wedge of the market, they can just buy you, or apply local pricing pressure in lock-step based on their data broker recommendations.
And even assuming companies don't resort to skeevy tactics to prevent competition, the companies that incentivize profit the most are going to have the most capital to expand and have the highest growth out of any potential competitors and fully saturate the market the fastest.
Though the above is only true to a point - obviously if the margins get high enough or product deviates sufficiently existing businesses with related interests will step in: witness Costco's chicken business.
So maybe the question is less why isn't there more competition and more so why haven't restaurants vertically integrated their potato supply? The main theory I'd have is that price increases haven't negatively impacted their margins or revenues sufficiently yet.
I'd add though that companies don't have to be "ethical and slightly less greedy" to compete on price. Competing on price is a natural way to gain market share. Nobody would say that Bezo expressed ethics and less greed when he said "Your margin is my opportunity"
Companies should charge the real equilibrium price of a product. It's an important signal to lower or increase supply. However, they should not create a coordinated scarcity or otherwise artificially force a higher price than the equilibrium price. This can only happen through (illegal!) cartels or too much market power (which the government is supposed to prevent).
As usual ee cannot ask for better people but need a system that makes the wrong people do the right thing.
The customers who buy the product with the lowest price.
A very low price is much easier to achieve if you can make use of economics of scale.
If there was big money to be made undercutting Big Potato, someone would do it. Even my CSA grows potatoes.
Your local CSA is also unlikely to be audited by the FDA unless they tried to go larger than your community.
However even in this case customers, or Big Potato buyers, can simply ally and create a new supplier where they are shareholders.
And yeah, it’s hard to do once, but obviously it’s dramatically harder to do after someone has already done it.
Bundle operating system with CPU.
But, both lost in the end, despite abusing monopoly and government intervention did not really help.
And in any case, no one is arguing conglomerated companies have no vulnerabilities or never lose.
I'm saying they have advantages, which is obviously true by the fact that conglomerated companies tend to dominate their sectors.