Nonpermissive electoral systems (such as single-member district plurality) are thought to benefit a small number of large parties because:

Nonpermissive electoral systems (such as single-member district plurality) are thought to benefit a small number of large parties because they have a strong mechanical reductive effect on the way votes are translated into seats, there are incentives to engage in strategic voting and, there are many incentives to engage in strategic entry. Strategic voting can happen when one votes a certain way to support someone that they didn't fully want to vote for to prevent an undesirable outcome. Strategic entry is when there is something going on in the market that stops new businesses from entering and competing within that market.