A firm that expects long-run economic rents from a particular project is likely ignoring the effects of competition.

Question

Quizplus · Accepted Answer

Long-run economic rents imply a sustained competitive advantage, which is typically difficult to maintain in a competitive market. Therefore, if a firm expects such rents, they may be ignoring the potential entry of competitors or other factors that may erode their advantage.

A Firm That Expects Long-Run Economic Rents from a Particular