In competitive markets, as more producers enter the market and as existing producers produce more, input prices go up. As a result, producers are unwilling to supply more unless prices are higher.

If you are in a business -- and it is doing great -- never, never, never believe that someone will not notice. If entry is possible, you will have competition. It will come in many forms.

For example, video rentals.

In the early years was very profitable. What happened. First, new video stores entered with a wider selection, better locations, lower prices. Then gas stations entered. Then grocery stores. Both gas stations and grocery stores had lower costs and more selling hours.