Question

Which of the following creates a barrier to subsequent entries in an industry dominated by first movers?

Multiple Choice

• implementation of policies to maximize imports and minimize exports

• specializing in the production of goods for which firms have a comparative advantage

• ability of first movers to benefit from increasing returns

• decrease in the variety of goods available to consumers and increase in the cost of existing goods

• laissez-faire stance toward trade adopted by first movers

Answer 1

ability of first movers to benefit from increasing returns

the above is answer..

because in this case, higher margins earned by the first mover discourage other to enter as they may not be able to compete