Discuss Amazon’s barriers of entry over others trying to enter the market
What will be an ideal response?
The barriers of entry that make entering into the online retail market are economies of scale in data and logistics. Amazon is the world’s largest on-line retailer. This allows for consumer data, payment processing, and inventory to be stored on many network computers that cost a significant amount of money to run. Smaller firms would have significant costs associated with start-up if they hope to meet the same needs Amazon meets for their consumers.
Amazon also experience economies of scale with logistics. The company has massive distribution warehouses that are significant in size but are economical to operate. A new firm entering into the market would not have the need for the large space and would operate a smaller warehouse at a higher average fixed cost.
You might also like to view...
How do the owners of a corporation relate to the business?
A) The assets of the owners are considered the same as the assets of the business. B) The owners and the business are not separate legal entities. C) The owners and the business are separate legal entities. D) None of these describe the legal relationship of the owners to the business.
During the period of rapid industrialization in the U.S. after the Civil War,
(a) real farm incomes fell drastically. (b) real incomes in the agricultural sector increased at a faster pace than real incomes in manufacturing. (c) real incomes in the agricultural sector increased at relatively the same rate as real incomes in manufacturing. (d) real incomes in the agricultural sector increased but at a slower pace than real incomes in manufacturing.
Points on the Production Possibilities Frontier are
A. associated with some unemployment B. both attainable and unattainable. C. attainable. D. unattainable.
A free market is a market:
A) that has price controls imposed by a ruling authority. B) where almost all exchanges take place involuntarily. C) where determination of equilibrium quantity is free from the forces of demand and supply. D) that operates with little or no government control.