When new firms enter the market, it can have several effects:

1. Increased competition: New firms increase the number of competitors in the market, leading to increased competition for customers. This can result in lower prices, improved product quality, and greater innovation as firms strive to differentiate themselves and attract customers.

2. Market expansion: New firms can help expand the market by attracting new customers or appealing to underserved segments. This can lead to overall growth in the industry and increased opportunities for all firms in the market.

3. Disruption: New firms may introduce innovative products, services, or business models that disrupt existing market dynamics. They may challenge established firms and force them to adapt or risk losing market share.

4. Employment opportunities: New firms typically require additional workforce, creating job opportunities and contributing to economic growth.

5. Market saturation: If too many new firms enter the market, it can lead to oversupply and saturation. This can result in increased competition for a limited customer base, lower profit margins, and potential consolidation or exit of some firms from the market.

Overall, the entry of new firms into the market can bring both benefits and challenges, depending on the specific circumstances and dynamics of the industry.