Entry of new competitors into a particular market is more difficult:
A)in the absence of strong economies of scale.
B)in the absence of learning effects.
C)if the industry has low capital requirements at the outset.
D)if strong product differentiation exists in the market.

Question

Quizplus · Accepted Answer

Strong product differentiation makes it difficult for new competitors to enter the market because established brands have a loyal customer base and it is challenging for new entrants to convince customers to switch to their product. Additionally, existing firms enjoy brand recognition, customer loyalty, and economies of scale, which are costly and time-consuming for new entrants to establish.

Entry of New Competitors into a Particular Market Is More