How can a company's research and development expenditures create a barrier to entry into its market?
A)It increases switching costs, which means companies cannot change production techniques.
B)It generates larger network effects for the product.
C)It prevents learning by doing, which keeps consumers from learning about new options.
D)It can result in new production technologies that reduce the cost of production.

Question

Quizplus · Accepted Answer

R&D expenditures can lead to the development of new and more efficient production technologies, which can reduce the cost of production for the company. This can create a barrier to entry for potential competitors who may not have the resources to develop similar technologies, and thus cannot compete on price.

How Can a Company's Research and Development Expenditures Create a Barrier