Large firms that invest in specific assets which cannot easily be redeployed to other uses or locations, may be able to protect their profits for longer than if they do not make such investments.

Question

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By investing in specific assets that cannot easily be redeployed, the large firms can have a competitive advantage and protect their profits for a longer period. For example, if a firm invests in research and development to create a unique product, it can earn a higher profit margin as competitors cannot replicate that product easily. Similarly, if a company invests in building a large manufacturing plant, it can benefit from economies of scale, reduce production costs, and have a better market position.

Large Firms That Invest in Specific Assets Which Cannot Easily