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#7 – Michael Mauboussin: The Fascinating World of Increasing Returns

Scaling Theory

CHAPTER

Exploring Increasing Returns in Business and Investment

This chapter examines the concept of increasing returns and its significance in business, investment, and policy-making, covering economies of scale, international trade, learning by doing, positive feedback and network effects, and recombination of ideas. Strategies for leveraging increasing returns are discussed with examples from companies like Tesla and BYD in the electric vehicle market, as well as the challenges faced by competitors in displacing dominant platforms such as Meta.

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