I don't understand what you are arguing about.
Likewise - I didn't really know what you were getting at so I scatter shot as much as I could.
If the entrepreneur does not sell his product in the market, how can he make a profit?
By definition, an entrepreneur operates a business and has ownership (risk). Historically it has also meant speculator (buy low, sell high, middleman, trader, etc.) Colloquially (and primarily in the US) and the way you tend to use it, it means inventor and creator. In any case, depending on your definition and scope, market can be as simple as R&D or financial speculation, or it can be the full creation of a widget to bring to market. It could be a person who owns stock in a company, or a partnership, or a family running a restaurant. The definition is pretty broad and tends to be idealized.
The entreprenuer have to bear the uncertainty of the market, and how the market reacts to the product the entrepreneur or his business creates. He has to experiment with the product to make it successful.
Sure, like all businesses.
He may bear financial risk, but this concept of a wild west entrepreneur with everyone on the line is very rare (and stupid). Most invest into a corporation or LLC, limiting their exposure. It's true that an unfortunate amount take loans guaranteed by personal assets, but many also get venture funds or other sources of money (giving away equity in the first, often higher commercial loans or government funding in the second). The point being that it is an active choice to take on risk and it scales at a very personal level.
No cost running a business?
This is akin to asking if there is "no cost to consume" (ie: to live); you said he would lose money either way, however he is
spending money, not losing money. It's important to differentiate "losing" and "spending", just as it is important to differentiate "profit", "earning" and "making".
I agree with this. Once the competitor copies your product, your product becomes commodified.
Right, at which point he makes zero economic profit.
---
I'm presuming that the focus of your argument is about
entitlement of his profit under a free market. He is, of course, as entitled to his profits as
labor is to their labor, or other ventures (personal financial risk being irrelevant) like corporations/LLCs... which is to say, not absolutely. This is because society directly and indirectly supports his ability to profit from his ventures. Under a free market, all creations are quickly commodified* and society decided that patents and copyrights exist to allow him to profit from successful ventures. Likewise, a business is not taxed on income like labor allowing pass through, giving a tax shelter to their enterprises. In most countries, the workers are supported collectively, through education, medical care and safety nets. Governments tend to offer credits for types of development (namely R&D), as well as small enterprise benefits and preferred status. The list is pretty long, including legal structures and contract support.
The reasons for these is to support entrepreneurs who create value. There are a lot less incentives to repackaging a widget that is already around, but a lot more for innovative or niche items.
So, for the most part they are allowed to win big, but they also pay a portion of the winnings for the chance to play in a more favorable environment.
The whole problem with capitalism is that people won't create goods for free.
That's not a problem, that's a feature. The price mechanism is what moderates the creation (and selection) of goods. The price mechanism requires consumers to have limited resources (income) so that they signal their preferences. Likewise, the income (cost of labor) is a baseline cost of producing a widget (service), allowing allocation of successful production to available labor. If labor was free it would also have to be unlimited not to run into issues... unfortunately, we don't have a lack of scarcity quite yet.
OTOH, more media is produced on YouTube, for free, than I'll ever be able to watch. Non-monetary incentives can be more powerful than (reasonable) monetary incentives. People do indeed create for free.
---
* Of course there are exceptions, barriers of entry, market space, unstable equilibriums, etc. Apple is a good example; generally technically inferior but occupies a weird part of a market that can't be entrenched on easily because they occupied that space first.