Zero-profit condition
Zero profit condition is a term in the theory of
competition in
Economics. It describes the condition that occurs when a business or industry has an extremely low (near-zero) cost of entry.
In these cases, people tend to join the industry until all the money is gone. This means that a person's ability to make a lot of money in that industry is low, because when others see the opportunity to make money, they will also join the industry, thus cutting into your profits.
Take, for example, the
real estate industry. In the mid 2000's there has been a huge real-estate boom, but real estate agents are not making any more money then previously. Why? Because it is very easy to become a real-estate agent, so when profits start to rise, more people become agents, and each agent already in the industry starts to sell less houses.
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Barriers to entry*
"Bubble-lusions: Why most real-estate agents aren't getting rich", Austan Goolsbee, Slate, Aug. 26, 2005.
