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S E44: Entry, Exit and Long-Run Profitability - How to get ahead in the Market

Think Like An Economist

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Create Customer Larkin Through Network Effects

Businesses can reduce their costs by becoming more efficient. Another way to create customer larkin is through network effects. These are about how a product is more useful if more people use it. Business managers understand all this, so they work hard to create network affict. This makes it harder for new firms to enter a market and succeed.

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