A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with:

Question

BlackTom AI · Accepted Answer

To approach this question, I’ll evaluate what first-mover advantages are typically associated with and how scale interacts with them.
Option a: Economies of scale. Large-scale entrants can spread fixed costs over a bigger output, lowering average costs and potentially deterring rivals. This makes it easier to sustain price competition or invest heavily in capabilities early, which is a classic first-mover advantage linked to scale economies. The higher the scale, the more pronounced the cost advantages can be, enabling faster market capture and greater competitive leverage.
Option b: Pioneering costs. These are the costs required to develop and introduce a new product or process, including research, development, and market education. While a large entrant may weather pioneering costs better due to more resources, pioneering costs themselves describe initial investments rather than the ongoing advantage gained specifically from being first in market. They can exist irrespective of company size and do not inherently reflect the typical first-mover benefit dependent on scale advantages.
Option c: Diseconomies of scale. This concept refers to the rising average costs that occur when a firm becomes too large, due to coordination problems, complexity, or inefficiencies. If diseconomies of scale dominate, being large can actually hurt competitive positioning, especially in early market entry where agility and cost control matter. Therefore, this option does not describe the first-mover advantages associated with scale.
Option d: Diseconomies of scope. This occurs when expanding into additional product lines increases average costs rather than providing shared efficiencies. While related to firm scope, diseconomies of scope does not capture the core first-mover advantages tied to large-scale production and cost leadership. It would more likely hinder the benefits that scale affords in fast-moving markets.
In summary, the reasoning centers on whether scale-related efficiencies enable an early entrant to establish cost leadership and durable competitive barriers. The relevant mechanism here is the strong cost advantage from producing at larger volumes, which is precisely what economies of scale describe. The remaining options describe costs or disadvantages that do not align with the primary first-mover benefits conferred by large-scale production capabilities.

MGF2351 - S2 2025 Week 9 Quiz

A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with:

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