Cost reduction, compared to increasing value, is more attractive when the firms in an industry have access to the same process innovations.

Question

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Increasing value can be more attractive than cost reduction when firms have access to the same process innovations because it allows a firm to differentiate its products or services, potentially leading to higher customer satisfaction and loyalty, and enabling the firm to command premium prices. Cost reduction in such a scenario might lead to a "race to the bottom," where competing solely on price can erode profit margins for all firms involved.

Cost Reduction, Compared to Increasing Value, Is More Attractive When