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Anyone doing economics here?
Former Member
Posts: 1,876,323 The Mix Honorary Guru
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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i'll get my coat......
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.