Update
The Oxford Biblical Studies Online and Oxford Islamic Studies Online have retired. Content you previously purchased on Oxford Biblical Studies Online or Oxford Islamic Studies Online has now moved to Oxford Reference, Oxford Handbooks Online, Oxford Scholarship Online, or What Everyone Needs to Know®. For information on how to continue to view articles visit the subscriber services page.
Dismiss

Related Content

More Like This

Show all results sharing these subjects:

  • Social sciences
  • Economics

GO

Show Summary Details

Overview

incumbent firm


Quick Reference

A firm which is already in position in a market. In a contestable market, where the goods produced by different firms are homogeneous and there are no sunk costs, there is complete symmetry between an incumbent firm and would-be entrants. If goods can vary in quality, so that reputation matters, and if there are any sunk costs, the incumbent is in a stronger competitive position than potential entrants: the incumbent has established market contacts, and has already incurred the sunk costs. An incumbent will have a further competitive advantage if cost savings come from learning by doing: an existing firm has a start on any new entrant in the experience from which cost reductions are derived.

Subjects: Social sciencesEconomics


Reference entries