Expanding markets do attract new entrants in general, but in the case of Bitcoin, it also increases the barrier to entry, because each participant must be capable of handling all Bitcoin transactions.  The cost to the network of processing a transaction grows at least as quickly as the number of miners (assuming constant technology for simplicity).

Also, you're right that in a reasonably decentralised environment, large mining companies cannot exclude competitors through voluntary means alone.  However, with Bitcoin, there is the 50% threshold to worry about too, something absent in most markets.  In a typical free-market, if an entity accumulates more than 50% of the business then they'll keep that monopoly if and only if they continue to outperform their competition.  This entity will begin to lose market-share if they even cease to innovate, let alone try to abuse their position.  With Bitcoin, there are different incentives involved and a monopolist may well stand to gain from excluding small miners by dropping their blocks.