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Anyone doing economics here?

Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
edited March 27 in Work & Study
Ok this is probably not the best place to ask but hopefully someone can help me out. What is an incumbent firm? <IMG alt="image" SRC="redface.gif" border="0">) Ive got this assignment and I swear its not in my notes anywhere and I need to know......is it on the same lines as a monopolist? I have to answer whether an incumbent firm can deter entry into an industry by threatening to start a price war?? Damn economics!
Post edited by JustV on

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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    i'm doing A-level economics, and i've never ever heard of an incumbent firm! So i'm not sure it's a universal term (like galaxy(!))

    i'll get my coat......
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    I think its refering to a firm currently in the market. I'm not sure its a specific economics term, but from what I can remember, the word 'incumberant' (not sure of the spelling - have only heard it used) is used in the context 'the current incumberant of the position'. So I'm guessing its asking 'Can a firm already in a certain market start a price war to prevent new firms entering?'

    Probably the emphasis being on it being a single firm, therefore unable to start a price war on its own, but if the others join in and a price war is started, they will be enjoying economies of scale a new firm won't be able to have, so they will probably prevent a new firm from entering the market as it would not be able to compete with the low prices of the 'incumbent' firms.
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