EC335 Lecture Notes - Lecture 13: Reproductive Isolation, Network Effect, Learning Curve
Document Summary
If a firm is to reman profitable or sustain profitability, or sustain its competitive advantage, it must prevent others from imitating it. The theory states that if all firms in the market have access to the same resources and capabilities (i. e. production technology) and strategy that creates value for consumers. One way a firm can sustain a competitive advantage is to control a scarce resource. Imperfect mobility means the resource is not automatically controlled by the highest bidder. In the real world, most resources are imperfectly mobile. Cospecialized resources are resources that are more valuable when used with other resources. The scarcity of immobility of a resource is not sufficient to maintain competitive advantage for long. Eventually, other firms might develop resources of their own that is compatible to the original. Isolating mechanisms are economics or market forces that limit a competitive advantage to be replicated by competitors.
