Economies of scale,absolute cost advantages,high capital requirements,and limited access to channels of distribution give incumbent firms an advantage over new entrants to an industry.

Question

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Economies of scale allow incumbent firms to produce more efficiently and at lower costs, giving them a cost advantage over new entrants. Absolute cost advantages may come from owning proprietary technology or having access to cheaper raw materials. High capital requirements limit the ability of new entrants to enter the market, as they may not have the financial resources to do so. Limited access to channels of distribution means that new entrants may find it difficult to get their products to market, while incumbent firms have established relationships and distribution networks. All of these factors give incumbent firms an advantage over new entrants in an industry.

Economies of Scale,absolute Cost Advantages,high Capital Requirements,and Limited Access to Channels