How are economies of scale and experience curve related to first-mover advantages?

Question

Question

business economics

Answer 1

Answer #1

Economies of scale and experience curve are directly related to the first mover advantages.
Economies of scale refers to the cost advantages that firms incur when they are able to reduce their overall production costs by increasing their total production unit's.
A first mover firm into an industry will be more efficient in handling costs and will be engaged in more cost effective production activities. This will allow them to expand their production level which will decrease their production costs even before other firms enter into the market. Hence Economies of scale is one of the main advantage of first mover firm's in industries.
Firms who are first movers into an industry, greater will be their experience in handling or producing various products. This will allow them to achieve more cost advantage when other firms enter into the market. Hence, the experience curve also shows the first mover advantage.

Answer 2

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